Australia markets open in 1 hour 17 minutes
  • ALL ORDS

    6,762.40
    +71.00 (+1.06%)
     
  • AUD/USD

    0.6952
    +0.0053 (+0.77%)
     
  • ASX 200

    6,578.70
    +50.30 (+0.77%)
     
  • OIL

    106.68
    -0.94 (-0.87%)
     
  • GOLD

    1,836.10
    +5.80 (+0.32%)
     
  • BTC-AUD

    30,277.52
    -782.74 (-2.52%)
     
  • CMC Crypto 200

    462.12
    +8.22 (+1.81%)
     

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

  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.
·2-min read
In this article:
  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.

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.


Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
 
First Advantage Corporation (FA) : Free Stock Analysis Report
 
Evoqua Water Technologies (AQUA) : Free Stock Analysis Report
 
To read this article on Zacks.com click here.
 
Zacks Investment Research

Our goal is to create a safe and engaging place for users to connect over interests and passions. In order to improve our community experience, we are temporarily suspending article commenting