CECE vs. TTEK: Which Stock Is the Better Value Option?
Investors with an interest in Pollution Control stocks have likely encountered both CECO Environmental (CECE) and Tetra Tech (TTEK). But which of these two companies is the best option for those looking for undervalued stocks? Let's take a closer look.
The best way to find great value stocks is to pair a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system. 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.
Both CECO Environmental and Tetra Tech have a Zacks Rank of # 2 (Buy) right now. This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that these stocks have improving earnings outlooks. But this is just one factor that value investors are interested in.
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.
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.
CECE currently has a forward P/E ratio of 15.94, while TTEK has a forward P/E of 19.63. We also note that CECE 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. TTEK currently has a PEG ratio of 1.31.
Another notable valuation metric for CECE is its P/B ratio of 1.43. Investors use the P/B ratio to look at a stock's market value versus its book value, which is defined as total assets minus total liabilities. By comparison, TTEK has a P/B of 3.38.
These metrics, and several others, help CECE earn a Value grade of A, while TTEK has been given a Value grade of C.
Both CECE and TTEK are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that CECE 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.