Investors interested in stocks from the Pollution Control sector have probably already heard of Heritage-Crystal Clean (HCCI - Free Report) and Sharps Compliance (SMED - 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.
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 puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
Heritage-Crystal Clean has a Zacks Rank of #2 (Buy), while Sharps Compliance 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 HCCI 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 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.
HCCI currently has a forward P/E ratio of 317.52, while SMED has a forward P/E of 540. We also note that HCCI has a PEG ratio of 21.17. 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. SMED currently has a PEG ratio of 24.
Another notable valuation metric for HCCI is its P/B ratio of 1.45. 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, SMED has a P/B of 4.30.
These are just a few of the metrics contributing to HCCI's Value grade of B and SMED's Value grade of D.
HCCI has seen stronger estimate revision activity and sports more attractive valuation metrics than SMED, so it seems like value investors will conclude that HCCI is the superior option right now.