Investors looking for stocks in the Waste Removal Services sector might want to consider either Quest Resource (QRHC) or Stericycle (SRCL). But which of these two companies is the best option for those looking for undervalued stocks? Let's take a closer look.
The best way to find great value stocks is to pair a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system. The proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
Currently, Quest Resource has a Zacks Rank of #1 (Strong Buy), while Stericycle 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 QRHC 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.
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.
QRHC currently has a forward P/E ratio of 16.20, while SRCL has a forward P/E of 26.21. We also note that QRHC has a PEG ratio of 1.08. This figure is similar to the commonly-used P/E ratio, with the PEG ratio also factoring in a company's expected earnings growth rate. SRCL currently has a PEG ratio of 3.28.
Another notable valuation metric for QRHC is its P/B ratio of 1.64. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. For comparison, SRCL has a P/B of 2.10.
Based on these metrics and many more, QRHC holds a Value grade of B, while SRCL has a Value grade of C.
QRHC sticks out from SRCL in both our Zacks Rank and Style Scores models, so value investors will likely feel that QRHC is the better option right now.
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Quest Resource Holding Corporation. (QRHC) : Free Stock Analysis Report
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