EMR or ETN: Which Is the Better Value Stock Right Now?
Investors with an interest in Manufacturing - Electronics stocks have likely encountered both Emerson Electric (EMR) and Eaton (ETN). But which of these two stocks presents investors with the better value opportunity right now? 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 proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.
Right now, Emerson Electric is sporting a Zacks Rank of #2 (Buy), while Eaton has a Zacks Rank of #3 (Hold). Investors should feel comfortable knowing that EMR likely has seen a stronger improvement to its earnings outlook than ETN has recently. But this is only part of the picture for value investors.
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 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.
EMR currently has a forward P/E ratio of 19.02, while ETN has a forward P/E of 23.05. We also note that EMR has a PEG ratio of 1.82. 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. ETN currently has a PEG ratio of 2.03.
Another notable valuation metric for EMR is its P/B ratio of 2.03. 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, ETN has a P/B of 4.51.
These metrics, and several others, help EMR earn a Value grade of B, while ETN has been given a Value grade of C.
EMR stands above ETN thanks to its solid earnings outlook, and based on these valuation figures, we also feel that EMR is the superior value option right now.
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Emerson Electric Co. (EMR) : Free Stock Analysis Report
Eaton Corporation, PLC (ETN) : Free Stock Analysis Report
