In This Article:
Investors interested in stocks from the Engineering - R and D Services sector have probably already heard of Aecom Technology (ACM) and Altair Engineering (ALTR). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.
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 Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.
Aecom Technology and Altair Engineering are both sporting a Zacks Rank of # 2 (Buy) right now. Investors should feel comfortable knowing that both of these stocks have an improving earnings outlook since the Zacks Rank favors companies that have witnessed positive analyst estimate revisions. 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.
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 22.05, while ALTR has a forward P/E of 80.27. We also note that ACM has a PEG ratio of 1.91. 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. ALTR currently has a PEG ratio of 6.69.
Another notable valuation metric for ACM is its P/B ratio of 6.36. The P/B ratio is used to compare a stock's market value with its book value, which is defined as total assets minus total liabilities. For comparison, ALTR has a P/B of 10.79.
Based on these metrics and many more, ACM holds a Value grade of B, while ALTR has a Value grade of F.
Both ACM and ALTR are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that ACM is the superior value option right now.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
AECOM (ACM) : Free Stock Analysis Report
Altair Engineering Inc. (ALTR) : Free Stock Analysis Report