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ATCO vs. CSWC: Which Stock Should Value Investors Buy Now?

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·2 min read
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  • CSWC
  • ATCO-PI

Investors interested in Financial - Investment Management stocks are likely familiar with Atlas (ATCO) and Capital Southwest (CSWC). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.

The best way to find great value stocks is to pair a strong Zacks Rank with an impressive 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.

Currently, Atlas has a Zacks Rank of #2 (Buy), while Capital Southwest has a Zacks Rank of #3 (Hold). This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that ATCO is likely seeing its earnings outlook improve to a greater extent. However, value investors will care about much more than just this.

Value investors also tend to look at a number of traditional, tried-and-true figures to help them find stocks that they believe are undervalued at their current share price levels.

The Value category of the Style Scores system identifies undervalued companies by looking at a number of key metrics. These include the long-favored P/E ratio, P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that help us determine a company's fair value.

ATCO currently has a forward P/E ratio of 10.15, while CSWC has a forward P/E of 15.14. We also note that ATCO has a PEG ratio of 0.48. This figure is similar to the commonly-used P/E ratio, with the PEG ratio also factoring in a company's expected earnings growth rate. CSWC currently has a PEG ratio of 15.14.

Another notable valuation metric for ATCO is its P/B ratio of 0.92. The P/B is a method of comparing a stock's market value to its book value, which is defined as total assets minus total liabilities. By comparison, CSWC has a P/B of 1.68.

These are just a few of the metrics contributing to ATCO's Value grade of A and CSWC's Value grade of D.

ATCO is currently sporting an improving earnings outlook, which makes it stick out in our Zacks Rank model. And, based on the above valuation metrics, we feel that ATCO is likely the superior value option right now.


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Atlas Corp. (ATCO) : Free Stock Analysis Report
 
Capital Southwest Corporation (CSWC) : Free Stock Analysis Report
 
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