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ACM or ALTR: Which Is the Better Value Stock Right Now?
Investors looking for stocks in the Engineering - R and D Services sector might want to consider either Aecom Technology (ACM - Free Report) or Altair Engineering (ALTR - Free Report) . But which of these two companies is the best option for those looking for undervalued stocks? Let's 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.
Right now, both Aecom Technology and Altair Engineering are sporting a Zacks Rank of # 2 (Buy). The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that both of these companies have improving earnings outlooks. However, value investors will care about much more than just this.
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.
ACM currently has a forward P/E ratio of 21.29, while ALTR has a forward P/E of 82.50. We also note that ACM has a PEG ratio of 1.85. 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 6.87.
Another notable valuation metric for ACM is its P/B ratio of 6.14. 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 11.09.
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.