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FA vs. AQUA: Which Stock Is the Better Value Option?

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Investors looking for stocks in the Technology Services sector might want to consider either First Advantage (FA) or Evoqua Water (AQUA). 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 proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.

Right now, First Advantage is sporting a Zacks Rank of #2 (Buy), while Evoqua Water has a Zacks Rank of #3 (Hold). This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that FA is likely seeing its earnings outlook improve to a greater extent. However, value investors will care about much more than just this.

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.

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.

FA currently has a forward P/E ratio of 14.16, while AQUA has a forward P/E of 40.72. We also note that FA has a PEG ratio of 1.22. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. AQUA currently has a PEG ratio of 2.71.

Another notable valuation metric for FA is its P/B ratio of 2. The P/B ratio is used to compare a stock's market value with its book value, which is defined as total assets minus total liabilities. For comparison, AQUA has a P/B of 6.72.

Based on these metrics and many more, FA holds a Value grade of B, while AQUA has a Value grade of C.

FA has seen stronger estimate revision activity and sports more attractive valuation metrics than AQUA, so it seems like value investors will conclude that FA is the superior option right now.

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First Advantage Corporation (FA) : Free Stock Analysis Report
Evoqua Water Technologies (AQUA) : Free Stock Analysis Report
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Zacks Investment Research

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