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 companies is the best option for those looking for undervalued stocks? Let's take a closer look.
We have found that the best way to discover great value opportunities is to pair a strong Zacks Rank with a great grade in the Value category of our Style Scores system. The proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.
Both CECO Environmental and Sharps Compliance have a Zacks Rank of # 2 (Buy) right now. This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that these stocks have improving earnings outlooks. However, value investors will care about much more than just this.
Value investors analyze a variety of traditional, tried-and-true metrics to help find companies that they believe are undervalued at their 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 15.61, while SMED has a forward P/E of 69.57. We also note that CECE has a PEG ratio of 1.04. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. SMED currently has a PEG ratio of 3.71.
Another notable valuation metric for CECE is its P/B ratio of 1.35. 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, SMED has a P/B of 2.51.
These metrics, and several others, help CECE earn a Value grade of B, while SMED has been given a Value grade of C.
Both CECE and SMED are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that CECE is the superior value option right now.