Back to top

Image: Bigstock

STRL or ACM: Which Is the Better Value Stock Right Now?

Read MoreHide Full Article

Investors interested in Engineering - R and D Services stocks are likely familiar with Sterling Infrastructure (STRL - Free Report) and Aecom Technology (ACM - Free Report) . But which of these two stocks presents investors with the better value opportunity right now? Let's 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, Sterling Infrastructure is sporting a Zacks Rank of #2 (Buy), while Aecom Technology has a Zacks Rank of #4 (Sell). Investors should feel comfortable knowing that STRL likely has seen a stronger improvement to its earnings outlook than ACM has recently. 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.

STRL currently has a forward P/E ratio of 19.88, while ACM has a forward P/E of 20.58. We also note that STRL has a PEG ratio of 1.33. 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. ACM currently has a PEG ratio of 1.48.

Another notable valuation metric for STRL is its P/B ratio of 5.03. 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, ACM has a P/B of 5.17.

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

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


See More Zacks Research for These Tickers


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


AECOM (ACM) - free report >>

Sterling Infrastructure, Inc. (STRL) - free report >>

Published in