HCCI or SMED: Which Is the Better Value Stock Right Now?
Zacks Investment Research | Oct 29, 2020 11:40PM ET
Investors interested in Pollution Control stocks are likely familiar with Heritage-Crystal Clean (NASDAQ:HCCI) and Sharps Compliance (NASDAQ:SMED). 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 proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
Currently, Heritage-Crystal Clean has a Zacks Rank of #2 (Buy), while Sharps Compliance has a Zacks Rank of #5 (Strong Sell). Investors should feel comfortable knowing that HCCI likely has seen a stronger improvement to its earnings outlook than SMED has recently. But this is only part of the picture 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.
HCCI currently has a forward P/E ratio of 58.58, while SMED has a forward P/E of 117.60. We also note that HCCI has a PEG ratio of 3.91. 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. SMED currently has a PEG ratio of 5.11.
Another notable valuation metric for HCCI is its P/B ratio of 1.39. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. For comparison, SMED has a P/B of 3.25.
These are just a few of the metrics contributing to HCCI's Value grade of B and SMED's Value grade of D.
HCCI sticks out from SMED in both our Zacks Rank and Style Scores models, so value investors will likely feel that HCCI is the better option right now.
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