Which stock currently offers the better value?

Investors interested in engineering, R&D services stocks are likely familiar with Babcock International Group PLC (BCKIY) and Howmet (HWM). But which of these two stocks is more attractive to value investors? To find out, we need to take a closer look at the two.

We have found that the best way to discover great value opportunities is to combine a strong Zacks Rank with an outstanding grade in the Value category of our Style Scores system. The proven Zacks Rank places an emphasis on earnings estimates and estimate revisions, while our Style Scores aim to identify stocks with specific traits.

Babcock International Group PLC and Howmet both currently sport a Zacks Rank of #2 (Buy). The Zacks Rank favors stocks that have recently seen positive earnings estimate revisions, so investors can be confident that both companies have better earnings prospects. But that’s just one of the factors that value investors care about.

Value investors are also interested in a number of proven valuation metrics that show when a company is undervalued at its current share price.

Our Value category evaluates stocks using a number of key metrics, including the tried-and-true P/E, P/S, earnings yield and cash flow per share, as well as a number of other fundamental metrics commonly used by value investors.

BCKIY currently has a forward P/E ratio of 12.44, while HWM has a forward P/E ratio of 33.12. We also note that BCKIY has a PEG ratio of 0.28. This figure is similar to the commonly used P/E ratio, with the PEG ratio also taking into account a company’s expected earnings growth rate. HWM currently has a PEG ratio of 1.45.

Another important valuation metric for BCKIY is its P/B ratio of 7.32. The P/B ratio compares a stock’s market value to its book value, which is defined as total assets minus total liabilities. For comparison, HWM has a P/B ratio of 8.

These and several other metrics help BCKIY earn a B rating, while HWM earns a D rating.

Both BCKIY and HWM are impressive stocks with solid earnings prospects, but based on these valuation numbers, we believe BCKIY is the better value option right now.

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

Howmet Aerospace Inc. (HWM): Free Stock Analysis Report

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