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TT or AQUA: Which Is the Better Value Stock Right Now?
Investors looking for stocks in the Technology Services sector might want to consider either Trane Technologies (TT - Free Report) or Evoqua Water (AQUA - Free Report) . But which of these two companies is the best option for those looking for undervalued stocks? Let's take a closer look.
The best way to find great value stocks is to pair a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system. The Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.
Currently, Trane Technologies has a Zacks Rank of #2 (Buy), while Evoqua Water 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 TT 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 highlights undervalued companies by looking at a variety of key metrics, including the popular P/E ratio, as well as the P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that have been used by value investors for years.
TT currently has a forward P/E ratio of 22.68, while AQUA has a forward P/E of 52.05. We also note that TT has a PEG ratio of 2.06. 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. AQUA currently has a PEG ratio of 3.47.
Another notable valuation metric for TT is its P/B ratio of 6.98. 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, AQUA has a P/B of 8.15.
These metrics, and several others, help TT earn a Value grade of B, while AQUA has been given a Value grade of C.
TT sticks out from AQUA in both our Zacks Rank and Style Scores models, so value investors will likely feel that TT is the better option right now.