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CECE vs. SMED: Which Stock Should Value Investors Buy Now?

Zacks Equity Research

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 presents investors with the better value opportunity right now? Let's take a closer look.

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.

CECO Environmental and Sharps Compliance are sporting Zacks Ranks of #1 (Strong Buy) and #5 (Strong Sell), 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 factor that value investors are interested in.

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.

CECE currently has a forward P/E ratio of 16.96, while SMED has a forward P/E of 24.47. We also note that CECE has a PEG ratio of 1.13. 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 1.30.

Another notable valuation metric for CECE is its P/B ratio of 1.77. 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 2.32.

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

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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