Investors with an interest in Pollution Control stocks have likely encountered both CECO Environmental (CECE - Free Report) and Tetra Tech (TTEK - 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 proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
Both CECO Environmental and Tetra Tech have a Zacks Rank of # 2 (Buy) right now. The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that both of these companies have improving earnings outlooks. 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.
CECE currently has a forward P/E ratio of 7.69, while TTEK has a forward P/E of 21.13. We also note that CECE has a PEG ratio of 0.51. 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. TTEK currently has a PEG ratio of 1.41.
Another notable valuation metric for CECE is its P/B ratio of 0.80. 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, TTEK has a P/B of 3.95.
These are just a few of the metrics contributing to CECE's Value grade of A and TTEK's Value grade of D.
Both CECE and TTEK are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that CECE is the superior value option right now.