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KBR vs. RTOXY: Which Stock Is the Better Value Option?

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Investors interested in Engineering - R and D Services stocks are likely familiar with KBR Inc. (KBR - Free Report) and ROTORK PLC . But which of these two companies is the best option for those looking for undervalued stocks? Let's take a closer look.

There are plenty of strategies for discovering value stocks, but we have found that pairing a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system produces the best returns. The Zacks Rank is a proven strategy that targets companies with positive earnings estimate revision trends, while our Style Scores work to grade companies based on specific traits.

KBR Inc. has a Zacks Rank of #1 (Strong Buy), while ROTORK PLC has a Zacks Rank of #4 (Sell) right now. Investors should feel comfortable knowing that KBR likely has seen a stronger improvement to its earnings outlook than RTOXY has recently. 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.

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.

KBR currently has a forward P/E ratio of 9.27, while RTOXY has a forward P/E of 17.62. We also note that KBR has a PEG ratio of 0.88. This popular figure is similar to the widely-used P/E ratio, but the PEG ratio also considers a company's expected EPS growth rate. RTOXY currently has a PEG ratio of 1.53.

Another notable valuation metric for KBR is its P/B ratio of 1.33. 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, RTOXY has a P/B of 4.11.

Based on these metrics and many more, KBR holds a Value grade of A, while RTOXY has a Value grade of D.

KBR stands above RTOXY thanks to its solid earnings outlook, and based on these valuation figures, we also feel that KBR is the superior value option right now.


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