Investors interested in Industrial Services stocks are likely familiar with Hudson Technologies (HDSN) and Ashtead Group PLC (ASHTY). But which of these two stocks offers value investors a better bang for their buck right now? We'll need to take a closer look.
There are plenty of strategies for discovering value stocks, but we have found that pairing a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system produces the best returns. The Zacks Rank is a proven strategy that targets companies with positive earnings estimate revision trends, while our Style Scores work to grade companies based on specific traits.
Hudson Technologies has a Zacks Rank of #1 (Strong Buy), while Ashtead Group PLC has a Zacks Rank of #4 (Sell) right now. The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that HDSN has an improving earnings outlook. But this is just one piece of the puzzle for value investors.
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.
HDSN currently has a forward P/E ratio of 5.23, while ASHTY has a forward P/E of 17.55. We also note that HDSN has a PEG ratio of 0.17. 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. ASHTY currently has a PEG ratio of 0.86.
Another notable valuation metric for HDSN is its P/B ratio of 2.98. 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, ASHTY has a P/B of 5.17.
These are just a few of the metrics contributing to HDSN's Value grade of A and ASHTY's Value grade of C.
HDSN has seen stronger estimate revision activity and sports more attractive valuation metrics than ASHTY, so it seems like value investors will conclude that HDSN 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