JCI vs. ALLE: Which Stock Is the Better Value Option?
Investors interested in stocks from the Security and Safety Services sector have probably already heard of Johnson Controls (JCI) and Allegion (ALLE). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.
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 puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
Johnson Controls and Allegion are sporting Zacks Ranks of #2 (Buy) and #3 (Hold), respectively, right now. Investors should feel comfortable knowing that JCI likely has seen a stronger improvement to its earnings outlook than ALLE has recently. But this is only part of the picture for value investors.
Value investors are also interested in a number of tried-and-true valuation metrics that help show when a company is undervalued at its 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 14.06, while ALLE has a forward P/E of 17.13. We also note that JCI has a PEG ratio of 0.94. 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 2.12.
Another notable valuation metric for JCI is its P/B ratio of 2.03. 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 10.41.
These are just a few of the metrics contributing to JCI's Value grade of B and ALLE's Value grade of C.
JCI has seen stronger estimate revision activity and sports more attractive valuation metrics than ALLE, 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
Allegion PLC (ALLE) : Free Stock Analysis Report
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