Investors interested in Engineering – R and D Services stocks are likely familiar with ChampionX (CHX) and Altair Engineering (ALTR). But which of these two stocks is more attractive to value investors? We’ll need to take a closer look to find out.
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.
ChampionX and Altair Engineering are both sporting a Zacks Rank of # 2 (Buy) right now. 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. However, value investors will care about much more than just this.
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 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.
CHX currently has a forward P/E ratio of 23.96, while ALTR has a forward P/E of 66.28. We also note that CHX has a PEG ratio of 0.41. This figure is similar to the commonly-used P/E ratio, with the PEG ratio also factoring in a company’s expected earnings growth rate. ALTR currently has a PEG ratio of 5.52.
Another notable valuation metric for CHX is its P/B ratio of 3.46. 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, ALTR has a P/B of 7.21.
These metrics, and several others, help CHX earn a Value grade of B, while ALTR has been given a Value grade of F.
Both CHX and ALTR are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that CHX is the superior value option right now.
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