Investors interested in Pollution Control stocks are likely familiar with CECO Environmental (CECE) and Sharps Compliance (SMED). But which of these two stocks presents investors with the better value opportunity right now? Let's 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 proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.
Currently, CECO Environmental has a Zacks Rank of #2 (Buy), while Sharps Compliance has a Zacks Rank of #3 (Hold). This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that CECE 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.
CECE currently has a forward P/E ratio of 19.24, while SMED has a forward P/E of 61.24. We also note that CECE has a PEG ratio of 1.28. 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 3.27.
Another notable valuation metric for CECE 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, SMED has a P/B of 2.19.
These are just a few of the metrics contributing to CECE's Value grade of B and SMED's Value grade of C.
CECE sticks out from SMED in both our Zacks Rank and Style Scores models, so value investors will likely feel that CECE is the better option right now.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report CECO Environmental Corp. (CECE): Free Stock Analysis Report Sharps Compliance Corp (SMED): Free Stock Analysis Report To read this article on Zacks.com click here.