Investors interested in stocks from the Engineering - R and D Services sector have probably already heard of Aecom Technology (ACM) and ROTORK PLC (RTOXY). But which of these two companies is the best option for those looking for undervalued stocks? Let's take a closer look.
We have found that the best way to discover great value opportunities is to pair a strong Zacks Rank with a great grade in the Value category of our Style Scores system. The Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.
Aecom Technology and ROTORK PLC are both sporting a Zacks Rank of # 2 (Buy) right now. This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that these stocks have improving earnings outlooks. However, value investors will care about much more than just this.
Value investors analyze a variety of traditional, tried-and-true metrics to help find companies that they believe are undervalued at their current share price levels.
Our Value category highlights undervalued companies by looking at a variety of key metrics, including the popular P/E ratio, as well as the P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that have been used by value investors for years.
ACM currently has a forward P/E ratio of 11.81, while RTOXY has a forward P/E of 23.04. We also note that ACM has a PEG ratio of 1.36. This popular figure is similar to the widely-used P/E ratio, but the PEG ratio also considers a company's expected EPS growth rate. RTOXY currently has a PEG ratio of 2.
Another notable valuation metric for ACM is its P/B ratio of 1.20. 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 5.29.
These metrics, and several others, help ACM earn a Value grade of B, while RTOXY has been given a Value grade of D.
Both ACM and RTOXY are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that ACM is the superior value option right now.
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AECOM (ACM) : Free Stock Analysis Report
ROTORK PLC (RTOXY) : Free Stock Analysis Report
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