BRC or ALLE: Which Is the Better Value Stock Right Now?
Investors looking for stocks in the Security and Safety Services sector might want to consider either Brady (BRC) or Allegion (ALLE). 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 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.
Brady has a Zacks Rank of #1 (Strong Buy), while Allegion has a Zacks Rank of #3 (Hold) right now. The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that BRC has an improving earnings outlook. But this is only part of the picture 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.
BRC currently has a forward P/E ratio of 12.86, while ALLE has a forward P/E of 14.47. We also note that BRC has a PEG ratio of 1.84. 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. ALLE currently has a PEG ratio of 2.66.
Another notable valuation metric for BRC is its P/B ratio of 2.52. 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, ALLE has a P/B of 7.01.
These metrics, and several others, help BRC earn a Value grade of B, while ALLE has been given a Value grade of C.
BRC has seen stronger estimate revision activity and sports more attractive valuation metrics than ALLE, so it seems like value investors will conclude that BRC is the superior option right now.
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Brady Corporation (BRC) : Free Stock Analysis Report
Allegion PLC (ALLE) : Free Stock Analysis Report
