Investors interested in Technology Services stocks are likely familiar with Harsco (HSC) and Thomson Reuters (TRI). But which of these two companies is the best option for those looking for undervalued stocks? 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 proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
Harsco has a Zacks Rank of #2 (Buy), while Thomson Reuters has a Zacks Rank of #4 (Sell) right now. This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that HSC 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 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.
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.
HSC currently has a forward P/E ratio of 23.78, while TRI has a forward P/E of 39.60. We also note that HSC has a PEG ratio of 2.38. 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. TRI currently has a PEG ratio of 3.36.
Another notable valuation metric for HSC is its P/B ratio of 1.47. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. For comparison, TRI has a P/B of 3.72.
Based on these metrics and many more, HSC holds a Value grade of A, while TRI has a Value grade of D.
HSC 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 HSC is likely the superior value option right now.
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Harsco Corporation (HSC) : Free Stock Analysis Report
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