ACM or JEC: Which Is the Better Value Stock Right Now?
Investors interested in stocks from the Engineering - R and D Services sector have probably already heard of Aecom Technology (ACM) and Jacobs Engineering (JEC). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.
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 puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
Aecom Technology has a Zacks Rank of #2 (Buy), while Jacobs Engineering has a Zacks Rank of #3 (Hold) right now. The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that ACM has an improving earnings outlook. 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.
Our Value category grades stocks based on a number of key metrics, including the tried-and-true P/E ratio, the P/S ratio, earnings yield, and cash flow per share, as well as a variety of other fundamentals that value investors frequently use.
ACM currently has a forward P/E ratio of 13.08, while JEC has a forward P/E of 15.99. We also note that ACM has a PEG ratio of 1.06. 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. JEC currently has a PEG ratio of 1.42.
Another notable valuation metric for ACM is its P/B ratio of 1.75. 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, JEC has a P/B of 2.12.
These metrics, and several others, help ACM earn a Value grade of A, while JEC has been given a Value grade of C.
ACM stands above JEC thanks to its solid earnings outlook, and based on these valuation figures, we also feel that ACM is the superior value option right now.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.