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

DCI

Investors with an interest in Pollution Control stocks have likely encountered both Heritage-Crystal Clean and Donaldson (DCI - Free Report) . But which of these two stocks offers value investors a better bang for their buck right now? We'll need to take a closer look.

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.

Heritage-Crystal Clean and Donaldson are sporting Zacks Ranks of #2 (Buy) and #3 (Hold), respectively, right now. The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that HCCI has an improving earnings outlook. 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.

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.

HCCI currently has a forward P/E ratio of 12.57, while DCI has a forward P/E of 18.99. We also note that HCCI has a PEG ratio of 0.84. 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. DCI currently has a PEG ratio of 1.81.

Another notable valuation metric for HCCI is its P/B ratio of 1.99. 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, DCI has a P/B of 5.62.

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

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

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