ACM vs. BCKIY: Which Stock Is the Better Value Option?

Investors interested in stocks from the Engineering - R and D Services sector have probably already heard of Aecom Technology (ACM) and Babcock International Group PLC (BCKIY). But which of these two stocks presents investors with the better value opportunity right now? 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 favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.

Right now, both Aecom Technology and Babcock International Group PLC are sporting a Zacks Rank of #2 (Buy). The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that both of these companies have improving earnings outlooks. But this is just one piece of the puzzle for value investors.

Value investors also try to analyze a wide range of traditional figures and metrics to help determine whether a company is undervalued at its current share price levels.

Our Value category highlights undervalued companies by looking at a variety of key metrics, including the popular P/E ratio, as well as the P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that have been used by value investors for years.

ACM currently has a forward P/E ratio of 15.04, while BCKIY has a forward P/E of 23.64. We also note that ACM has a PEG ratio of 1.11. This popular figure is similar to the widely-used P/E ratio, but the PEG ratio also considers a company's expected EPS growth rate. BCKIY currently has a PEG ratio of 1.65.

Another notable valuation metric for ACM is its P/B ratio of 4.75. 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, BCKIY has a P/B of 9.2.

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

Both ACM and BCKIY are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that ACM is the superior value option right now.

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AECOM (ACM): Free Stock Analysis Report

Babcock International Group PLC (BCKIY): Free Stock Analysis Report

This article originally published on Zacks Investment Research (zacks.com).

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