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ATCO vs. CSWC: Which Stock Should Value Investors Buy Now?

Zacks Equity Research
·2 min read

Investors looking for stocks in the Financial - Investment Management sector might want to consider either Atlas (ATCO) or Capital Southwest (CSWC). But which of these two companies is the best option for those looking for undervalued stocks? Let's 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.

Currently, both Atlas and Capital Southwest are holding a Zacks Rank of # 2 (Buy). This means that both companies have witnessed positive earnings estimate revisions, so investors should feel comfortable knowing that both of these stocks have an improving earnings outlook. But this is just one factor that value investors are interested in.

Value investors are also interested in a number of tried-and-true valuation metrics that help show when a company is undervalued at its current share price levels.

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The Style Score Value grade factors in a variety of key fundamental metrics, including the popular P/E ratio, P/S ratio, earnings yield, cash flow per share, and a number of other key stats that are commonly used by value investors.

ATCO currently has a forward P/E ratio of 10.60, while CSWC has a forward P/E of 15.66. We also note that ATCO has a PEG ratio of 0.50. 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. CSWC currently has a PEG ratio of 15.66.

Another notable valuation metric for ATCO is its P/B ratio of 0.96. 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, CSWC has a P/B of 1.68.

These are just a few of the metrics contributing to ATCO's Value grade of A and CSWC's Value grade of F.

Both ATCO and CSWC are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that ATCO is the superior value option right now.


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Atlas Corp. (ATCO) : Free Stock Analysis Report
 
Capital Southwest Corporation (CSWC) : Free Stock Analysis Report
 
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