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

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Investors looking for stocks in the Engineering - R and D Services sector might want to consider either Aecom Technology (ACM - Free Report) or ROTORK PLC . 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.

Currently, Aecom Technology has a Zacks Rank of #2 (Buy), while ROTORK PLC has a Zacks Rank of #4 (Sell). This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that ACM is likely seeing its earnings outlook improve to a greater extent. But this is just one piece of the puzzle 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.

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 10.90, while RTOXY has a forward P/E of 22.99. We also note that ACM has a PEG ratio of 1.17. 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. RTOXY currently has a PEG ratio of 2.

Another notable valuation metric for ACM is its P/B ratio of 1.13. 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, RTOXY has a P/B of 5.12.

These metrics, and several others, help ACM earn a Value grade of A, while RTOXY has been given a Value grade of F.

ACM sticks out from RTOXY in both our Zacks Rank and Style Scores models, so value investors will likely feel that ACM is the better option right now.


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