Investors interested in stocks from the Pollution Control sector have probably already heard of CECO Environmental (CECE) and Sharps Compliance (SMED). 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 proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.
CECO Environmental and Sharps Compliance are sporting Zacks Ranks of #2 (Buy) and #5 (Strong Sell), respectively, right now. Investors should feel comfortable knowing that CECE likely has seen a stronger improvement to its earnings outlook than SMED has recently. However, value investors will care about much more than just this.
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.
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.
CECE currently has a forward P/E ratio of 17.48, while SMED has a forward P/E of 216.67. We also note that CECE has a PEG ratio of 1.17. 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. SMED currently has a PEG ratio of 11.56.
Another notable valuation metric for CECE is its P/B ratio of 1.72. 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, SMED has a P/B of 2.05.
These metrics, and several others, help CECE earn a Value grade of B, while SMED has been given a Value grade of D.
CECE has seen stronger estimate revision activity and sports more attractive valuation metrics than SMED, so it seems like value investors will conclude that CECE is the superior option right now.
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CECO Environmental Corp. (CECE) : Free Stock Analysis Report
Sharps Compliance Corp (SMED) : Free Stock Analysis Report
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