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STRL vs. ACM: Which Stock Should Value Investors Buy Now?

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Investors interested in stocks from the Engineering - R and D Services sector have probably already heard of Sterling Infrastructure (STRL - Free Report) and Aecom Technology (ACM - 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.

Everyone has their own methods for finding great value opportunities, but our model includes pairing an impressive grade in the Value category of our Style Scores system with a strong Zacks Rank. 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.

Sterling Infrastructure has a Zacks Rank of #2 (Buy), while Aecom Technology has a Zacks Rank of #4 (Sell) right now. This means that STRL's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. But this is only part of the picture for value investors.

Value investors also tend to look at a number of traditional, tried-and-true figures to help them find stocks 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.

STRL currently has a forward P/E ratio of 20.10, while ACM has a forward P/E of 21.62. We also note that STRL has a PEG ratio of 1.34. 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. ACM currently has a PEG ratio of 1.61.

Another notable valuation metric for STRL is its P/B ratio of 5.15. 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 5.25.

These are just a few of the metrics contributing to STRL's Value grade of B and ACM's Value grade of C.

STRL stands above ACM thanks to its solid earnings outlook, and based on these valuation figures, we also feel that STRL is the superior value option right now.


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