Investors interested in Engineering - R and D Services stocks are likely familiar with Quanta Services (PWR - Free Report) and Jacobs Engineering (JEC - Free Report) . But which of these two stocks offers value investors a better bang for their buck right now? We'll need to 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.
Right now, Quanta Services is sporting a Zacks Rank of #1 (Strong Buy), while Jacobs Engineering has a Zacks Rank of #5 (Strong Sell). Investors should feel comfortable knowing that PWR likely has seen a stronger improvement to its earnings outlook than JEC has recently. But this is just one piece of the puzzle for value investors.
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.
The Value category of the Style Scores system identifies undervalued companies by looking at a number of key metrics. These include the long-favored P/E ratio, P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that help us determine a company's fair value.
PWR currently has a forward P/E ratio of 11.28, while JEC has a forward P/E of 14.46. We also note that PWR has a PEG ratio of 1.41. This figure is similar to the commonly-used P/E ratio, with the PEG ratio also factoring in a company's expected earnings growth rate. JEC currently has a PEG ratio of 1.44.
Another notable valuation metric for PWR is its P/B ratio of 1.61. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. For comparison, JEC has a P/B of 1.82.
These are just a few of the metrics contributing to PWR's Value grade of B and JEC's Value grade of D.
PWR stands above JEC thanks to its solid earnings outlook, and based on these valuation figures, we also feel that PWR is the superior value option right now.