BCKIY or PWR: Which Is the Better Value Stock Right Now?

Investors interested in Engineering - R and D Services stocks are likely familiar with Babcock International Group PLC (BCKIY) and Quanta Services (PWR). But which of these two stocks presents investors with the better value opportunity right now? Let's take a closer look.

We have found that the best way to discover great value opportunities is to pair a strong Zacks Rank with a great 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.

Babcock International Group PLC and Quanta Services are both sporting 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.

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.

BCKIY currently has a forward P/E ratio of 14.35, while PWR has a forward P/E of 51.31. We also note that BCKIY has a PEG ratio of 0.44. 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. PWR currently has a PEG ratio of 2.59.

Another notable valuation metric for BCKIY is its P/B ratio of 6.34. 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, PWR has a P/B of 11.82.

These are just a few of the metrics contributing to BCKIY's Value grade of A and PWR's Value grade of D.

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

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

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