Back to top

Image: Bigstock

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

Read MoreHide Full Article

Investors interested in stocks from the Engineering - R and D Services sector have probably already heard of Aecom Technology (ACM - Free Report) and ROTORK PLC . But which of these two stocks presents investors with the better value opportunity right now? Let's take a closer look.

The best way to find great value stocks is to pair a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system. 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.

Aecom Technology has a Zacks Rank of #2 (Buy), while ROTORK PLC has a Zacks Rank of #3 (Hold) right now. 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. 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.

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.

ACM currently has a forward P/E ratio of 14.21, while RTOXY has a forward P/E of 23.61. We also note that ACM has a PEG ratio of 1.15. 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. RTOXY currently has a PEG ratio of 1.89.

Another notable valuation metric for ACM is its P/B ratio of 1.90. 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 5.60.

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

ACM is currently sporting an improving earnings outlook, which makes it stick out in our Zacks Rank model. And, based on the above valuation metrics, we feel that ACM is likely the superior value option right now.


See More Zacks Research for These Tickers


Normally $25 each - click below to receive one report FREE:


AECOM (ACM) - free report >>

Published in