Investors looking for stocks in the Engineering - R and D Services sector might want to consider either Sterling Infrastructure (STRL) or Aecom Technology (ACM). But which of these two companies is the best option for those looking for undervalued stocks? Let's take a closer look.

Everyone has their own methods for finding great value opportunities, but our model includes pairing an impressive grade in the Value category of our Style Scores system with a strong Zacks Rank. The proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.

Right now, Sterling Infrastructure is sporting a Zacks Rank of #1 (Strong Buy), while Aecom Technology has a Zacks Rank of #3 (Hold). Investors should feel comfortable knowing that STRL likely has seen a stronger improvement to its earnings outlook than ACM has recently. However, value investors will care about much more than just this.

Value investors analyze a variety of traditional, tried-and-true metrics to help find companies 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.

STRL currently has a forward P/E ratio of 16.52, while ACM has a forward P/E of 18.64. We also note that STRL has a PEG ratio of 1.10. 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. ACM currently has a PEG ratio of 1.59.

Another notable valuation metric for STRL is its P/B ratio of 4.51. 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, ACM has a P/B of 5.26.

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

STRL is currently sporting an improving earnings outlook, which makes it stick out in our Zacks Rank model. And, based on the above valuation metrics, we feel that STRL is likely the superior value option right now.

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

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