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Should Value Investors Buy Aecom Technology (ACM) Stock?

Zacks Equity Research

Here at Zacks, our focus is on the proven Zacks Rank system, which emphasizes earnings estimates and estimate revisions to find great stocks. Nevertheless, we are always paying attention to the latest value, growth, and momentum trends to underscore strong picks.

Of these, perhaps no stock market trend is more popular than value investing, which is a strategy that has proven to be successful in all sorts of market environments. Value investors rely on traditional forms of analysis on key valuation metrics to find stocks that they believe are undervalued, leaving room for profits.

Zacks has developed the innovative Style Scores system to highlight stocks with specific traits. For example, value investors will be interested in stocks with great grades in the "Value" category. When paired with a high Zacks Rank, "A" grades in the Value category are among the strongest value stocks on the market today.

One stock to keep an eye on is Aecom Technology (ACM). ACM is currently holding a Zacks Rank of #2 (Buy) and a Value grade of A. The stock has a Forward P/E ratio of 12.86. This compares to its industry's average Forward P/E of 14.12. Over the last 12 months, ACM's Forward P/E has been as high as 13.23 and as low as 8.85, with a median of 10.90.

Another valuation metric that we should highlight is ACM's P/B ratio of 1.53. 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. This company's current P/B looks solid when compared to its industry's average P/B of 2.12. Over the past year, ACM's P/B has been as high as 1.53 and as low as 0.94, with a median of 1.18.

Value investors also love the P/S ratio, which is calculated by simply dividing a stock's price with the company's sales. Some people prefer this metric because sales are harder to manipulate on an income statement. This means it could be a truer performance indicator. ACM has a P/S ratio of 0.34. This compares to its industry's average P/S of 0.68.

Finally, investors should note that ACM has a P/CF ratio of 12.46. This metric focuses on a firm's operating cash flow and is often used to find stocks that are undervalued based on the strength of their cash outlook. ACM's current P/CF looks attractive when compared to its industry's average P/CF of 17.64. ACM's P/CF has been as high as 14.60 and as low as 9, with a median of 10.78, all within the past year.

These are only a few of the key metrics included in Aecom Technology's strong Value grade, but they help show that the stock is likely undervalued right now. When factoring in the strength of its earnings outlook, ACM looks like an impressive value stock at the moment.


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