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TIXT or AQUA: Which Is the Better Value Stock Right Now?

Zacks Equity Research
·2 min read

Investors interested in stocks from the Technology Services sector have probably already heard of Telus International (TIXT) and Evoqua Water (AQUA). But which of these two stocks presents investors with the better value opportunity right now? 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 emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.

Right now, Telus International is sporting a Zacks Rank of #2 (Buy), while Evoqua Water has a Zacks Rank of #3 (Hold). This means that TIXT's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. However, value investors will care about much more than just this.

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.

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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.

TIXT currently has a forward P/E ratio of 23.04, while AQUA has a forward P/E of 35.82. We also note that TIXT has a PEG ratio of 1.36. 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. AQUA currently has a PEG ratio of 2.39.

Another notable valuation metric for TIXT is its P/B ratio of 4.33. 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, AQUA has a P/B of 6.49.

Based on these metrics and many more, TIXT holds a Value grade of B, while AQUA has a Value grade of C.

TIXT stands above AQUA thanks to its solid earnings outlook, and based on these valuation figures, we also feel that TIXT is the superior value option right now.


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TELUS International CDA Inc. (TIXT) : Free Stock Analysis Report
 
Evoqua Water Technologies (AQUA) : Free Stock Analysis Report
 
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Zacks Investment Research