ACM or STRL: Which Is the Better Value Stock Right Now?
Investors interested in Engineering - R and D Services stocks are likely familiar with Aecom Technology (ACM) and Sterling Infrastructure (STRL). But which of these two stocks presents investors with the better value opportunity right now? 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.
Currently, both Aecom Technology and Sterling Infrastructure are holding a Zacks Rank of #2 (Buy). The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that both of these companies have improving earnings outlooks. But this is just one piece of the puzzle 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.
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.
ACM currently has a forward P/E ratio of 16.40, while STRL has a forward P/E of 34.96. We also note that ACM has a PEG ratio of 1.21. 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. STRL currently has a PEG ratio of 2.33.
Another notable valuation metric for ACM is its P/B ratio of 5.18. 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, STRL has a P/B of 11.89.
These metrics, and several others, help ACM earn a Value grade of B, while STRL has been given a Value grade of F.
Both ACM and STRL are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that ACM is the superior value option right now.
Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.
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