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JCI vs. AAXN: Which Stock Is the Better Value Option?

Zacks Equity Research
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Investors interested in stocks from the Security and Safety Services sector have probably already heard of Johnson Controls (JCI) and Axon Enterprise (AAXN). But which of these two companies is the best option for those looking for undervalued stocks? 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, Johnson Controls is sporting a Zacks Rank of #2 (Buy), while Axon Enterprise has a Zacks Rank of #3 (Hold). This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that JCI is likely seeing its earnings outlook improve to a greater extent. But this is just one factor that value investors are interested in.

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.

JCI currently has a forward P/E ratio of 20.92, while AAXN has a forward P/E of 74.87. We also note that JCI has a PEG ratio of 2.16. 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. AAXN currently has a PEG ratio of 2.99.

Another notable valuation metric for JCI is its P/B ratio of 1.69. 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, AAXN has a P/B of 9.02.

These metrics, and several others, help JCI earn a Value grade of A, while AAXN has been given a Value grade of F.

JCI has seen stronger estimate revision activity and sports more attractive valuation metrics than AAXN, so it seems like value investors will conclude that JCI is the superior option right now.


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Johnson Controls International plc (JCI) : Free Stock Analysis Report
 
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