JCI or ALRM: Which Is the Better Value Stock Right Now?
Investors with an interest in Security and Safety Services stocks have likely encountered both Johnson Controls (JCI) and Alarm.com Holdings (ALRM). 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.
Right now, Johnson Controls is sporting a Zacks Rank of #2 (Buy), while Alarm.com Holdings has a Zacks Rank of #3 (Hold). This means that JCI's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. But this is just one piece of the puzzle 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.
JCI currently has a forward P/E ratio of 18.72, while ALRM has a forward P/E of 32.73. We also note that JCI has a PEG ratio of 1.38. 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. ALRM currently has a PEG ratio of 3.59.
Another notable valuation metric for JCI is its P/B ratio of 2.69. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. For comparison, ALRM has a P/B of 4.10.
These are just a few of the metrics contributing to JCI's Value grade of B and ALRM's Value grade of D.
JCI is currently sporting an improving earnings outlook, which makes it stick out in our Zacks Rank model. And, based on the above valuation metrics, we feel that JCI is likely the superior value option right now.
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Johnson Controls International plc (JCI) : Free Stock Analysis Report
Alarm.com Holdings, Inc. (ALRM) : Free Stock Analysis Report
