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KBR or RTOXY: Which Is the Better Value Stock Right Now?

Zacks Equity Research

Investors interested in Engineering - R and D Services stocks are likely familiar with KBR Inc. (KBR) and ROTORK PLC (RTOXY). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.

There are plenty of strategies for discovering value stocks, but we have found that pairing a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system produces the best returns. The Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.

KBR Inc. has a Zacks Rank of #2 (Buy), while ROTORK PLC has a Zacks Rank of #3 (Hold) right now. The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that KBR has an improving earnings outlook. But this is just one factor that value investors are interested in.

Value investors also tend to look at a number of traditional, tried-and-true figures to help them find stocks 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.

KBR currently has a forward P/E ratio of 14.80, while RTOXY has a forward P/E of 22.68. We also note that KBR has a PEG ratio of 1.64. 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. RTOXY currently has a PEG ratio of 1.81.

Another notable valuation metric for KBR is its P/B ratio of 1.94. 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, RTOXY has a P/B of 5.21.

Based on these metrics and many more, KBR holds a Value grade of B, while RTOXY has a Value grade of C.

KBR stands above RTOXY thanks to its solid earnings outlook, and based on these valuation figures, we also feel that KBR is the superior value option right now.


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