Investors interested in Engineering - R and D Services stocks are likely familiar with Babcock International Group PLC (BCKIY) and Sterling Infrastructure (STRL). But which of these two stocks presents investors with the better value opportunity right now? Let's take a closer look.

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 Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.

Babcock International Group PLC and Sterling Infrastructure are sporting Zacks Ranks of #2 (Buy) and #3 (Hold), respectively, right now. This means that BCKIY's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. But this is just one piece of the puzzle 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.

The Value category of the Style Scores system identifies undervalued companies by looking at a number of key metrics. These include the long-favored P/E ratio, P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that help us determine a company's fair value.

BCKIY currently has a forward P/E ratio of 17.53, while STRL has a forward P/E of 25.76. We also note that BCKIY has a PEG ratio of 0.54. This popular figure is similar to the widely-used P/E ratio, but the PEG ratio also considers a company's expected EPS growth rate. STRL currently has a PEG ratio of 1.72.

Another notable valuation metric for BCKIY is its P/B ratio of 8.99. The P/B is a method of comparing a stock's market value to its book value, which is defined as total assets minus total liabilities. By comparison, STRL has a P/B of 11.4.

These metrics, and several others, help BCKIY earn a Value grade of B, while STRL has been given a Value grade of D.

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

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This article originally published on Zacks Investment Research (zacks.com).

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