Investors with an interest in Engineering - R and D Services stocks have likely encountered both Aecom Technology (ACM) and ROTORK PLC (RTOXY). But which of these two stocks presents investors with the better value opportunity right now? Let's take a closer look.
There are plenty of strategies for discovering value stocks, but we have found that pairing a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system produces the best returns. The proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
Aecom Technology has a Zacks Rank of #2 (Buy), while ROTORK PLC has a Zacks Rank of #3 (Hold) right now. This means that ACM's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. But this is just one piece of the puzzle for value investors.
Value investors are also interested in a number of tried-and-true valuation metrics that help show when a company is undervalued at its current share price levels.
The Style Score Value grade factors in a variety of key fundamental metrics, including the popular P/E ratio, P/S ratio, earnings yield, cash flow per share, and a number of other key stats that are commonly used by value investors.
ACM currently has a forward P/E ratio of 10.91, while RTOXY has a forward P/E of 27.52. We also note that ACM has a PEG ratio of 1.96. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. RTOXY currently has a PEG ratio of 2.39.
Another notable valuation metric for ACM is its P/B ratio of 1.23. Investors use the P/B ratio to look at a stock's market value versus its book value, which is defined as total assets minus total liabilities. By comparison, RTOXY has a P/B of 5.95.
These metrics, and several others, help ACM earn a Value grade of A, while RTOXY has been given a Value grade of F.
ACM stands above RTOXY thanks to its solid earnings outlook, and based on these valuation figures, we also feel that ACM is the superior value option right now.
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AECOM (ACM) : Free Stock Analysis Report
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