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

Zacks Equity Research
·2 min read

Investors interested in Pollution Control stocks are likely familiar with 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.

Everyone has their own methods for finding great value opportunities, but our model includes pairing an impressive grade in the Value category of our Style Scores system with a strong Zacks Rank. The proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.

CECO Environmental and Sharps Compliance are sporting Zacks Ranks of #2 (Buy) and #3 (Hold), respectively, right now. The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that CECE has an improving earnings outlook. 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.

The Style Score Value grade factors in a variety of key fundamental metrics, including the popular P/E ratio, P/S ratio, earnings yield, cash flow per share, and a number of other key stats that are commonly used by value investors.

CECE currently has a forward P/E ratio of 15.32, while SMED has a forward P/E of 69.36. We also note that CECE has a PEG ratio of 1.02. 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 3.02.

Another notable valuation metric for CECE is its P/B ratio of 1.52. 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 4.22.

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

CECE sticks out from SMED in both our Zacks Rank and Style Scores models, so value investors will likely feel that CECE is the better 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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