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TTEK vs. DCI: Which Stock Should Value Investors Buy Now?

Zacks Equity Research
MEET vs. WDAY: Which Stock Is the Better Value Option?

Investors interested in stocks from the Pollution Control sector have probably already heard of Tetra Tech (TTEK) and Donaldson (DCI). 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.

Currently, Tetra Tech has a Zacks Rank of #2 (Buy), while Donaldson has a Zacks Rank of #3 (Hold). This means that TTEK's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. But this is only part of the picture for value investors.

Value investors also try to analyze a wide range of traditional figures and metrics to help determine whether 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.

TTEK currently has a forward P/E ratio of 22.28, while DCI has a forward P/E of 23.92. We also note that TTEK has a PEG ratio of 1.67. 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. DCI currently has a PEG ratio of 2.08.

Another notable valuation metric for TTEK is its P/B ratio of 3.42. 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, DCI has a P/B of 7.41.

These metrics, and several others, help TTEK earn a Value grade of A, while DCI has been given a Value grade of C.

TTEK sticks out from DCI in both our Zacks Rank and Style Scores models, so value investors will likely feel that TTEK is the better option right now.

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Tetra Tech, Inc. (TTEK) : Free Stock Analysis Report
Donaldson Company, Inc. (DCI) : Free Stock Analysis Report
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