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Investors with an interest in Engineering - R and D Services stocks have likely encountered both 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.
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, Aecom Technology has a Zacks Rank of #2 (Buy), while Altair Engineering has a Zacks Rank of #3 (Hold). This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that ACM is likely seeing its earnings outlook improve to a greater extent. But this is just one factor that value investors are interested in.
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.
ACM currently has a forward P/E ratio of 20.76, while ALTR has a forward P/E of 73.99. We also note that ACM has a PEG ratio of 1.80. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. ALTR currently has a PEG ratio of 6.17.
Another notable valuation metric for ACM is its P/B ratio of 5.99. 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, ALTR has a P/B of 11.21.
Based on these metrics and many more, ACM holds a Value grade of B, while ALTR has a Value grade of F.
ACM sticks out from ALTR in both our Zacks Rank and Style Scores models, so value investors will likely feel that ACM is the better option right now.
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AECOM (ACM) : Free Stock Analysis Report
Altair Engineering Inc. (ALTR) : Free Stock Analysis Report