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CECE vs. SMED: Which Stock Is the Better Value Option?

Zacks Equity Research
·2 min read

Investors looking for stocks in the Pollution Control sector might want to consider either CECO Environmental (CECE) or Sharps Compliance (SMED). But which of these two stocks presents investors with the better value opportunity right now? 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 is a proven strategy that targets companies with positive earnings estimate revision trends, while our Style Scores work to grade companies based on specific traits.

CECO Environmental and Sharps Compliance are sporting Zacks Ranks of #2 (Buy) and #3 (Hold), respectively, right now. This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that CECE is likely seeing its earnings outlook improve to a greater extent. But this is just one piece of the puzzle for value investors.

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 grades stocks based on a number of key metrics, including the tried-and-true P/E ratio, the P/S ratio, earnings yield, and cash flow per share, as well as a variety of other fundamentals that value investors frequently use.

CECE currently has a forward P/E ratio of 12.88, while SMED has a forward P/E of 57.27. We also note that CECE has a PEG ratio of 0.86. 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. SMED currently has a PEG ratio of 2.49.

Another notable valuation metric for CECE is its P/B ratio of 1.27. 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, SMED has a P/B of 3.48.

These metrics, and several others, help CECE earn a Value grade of B, while SMED has been given a Value grade of C.

CECE 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 CECE is likely the superior value 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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