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ITT vs. DHR: Which Stock Should Value Investors Buy Now?

Zacks Equity Research
·2 min read

Investors with an interest in Diversified Operations stocks have likely encountered both ITT (ITT) and Danaher (DHR). But which of these two stocks offers value investors a better bang for their buck right now? We'll need to 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.

Both ITT and Danaher have a Zacks Rank of # 2 (Buy) right now. This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that these stocks have improving earnings outlooks. 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 highlights undervalued companies by looking at a variety of key metrics, including the popular P/E ratio, as well as the P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that have been used by value investors for years.

ITT currently has a forward P/E ratio of 20.83, while DHR has a forward P/E of 39.22. We also note that ITT has a PEG ratio of 3. 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. DHR currently has a PEG ratio of 3.37.

Another notable valuation metric for ITT is its P/B ratio of 2.46. 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, DHR has a P/B of 4.61.

These metrics, and several others, help ITT earn a Value grade of B, while DHR has been given a Value grade of D.

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


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ITT Inc. (ITT) : Free Stock Analysis Report
 
Danaher Corporation (DHR) : Free Stock Analysis Report
 
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Zacks Investment Research