Investors with an interest in Pollution Control stocks have likely encountered both CECO Environmental (CECE - Free Report) and Sharps Compliance (SMED - 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 proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
Currently, CECO Environmental has a Zacks Rank of #2 (Buy), while Sharps Compliance 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 CECE is likely seeing its earnings outlook improve to a greater extent. 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.
CECE currently has a forward P/E ratio of 14.83, while SMED has a forward P/E of 69.54. We also note that CECE has a PEG ratio of 0.99. 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. SMED currently has a PEG ratio of 3.02.
Another notable valuation metric for CECE is its P/B ratio of 1.46. The P/B is a method of comparing a stock's market value to its book value, which is defined as total assets minus total liabilities. By comparison, SMED has a P/B of 4.23.
Based on these metrics and many more, CECE holds a Value grade of B, while SMED has a Value grade of C.
CECE stands above SMED thanks to its solid earnings outlook, and based on these valuation figures, we also feel that CECE is the superior value option right now.