Investors interested in Manufacturing - General Industrial stocks are likely familiar with Mitsubishi Heavy Industries, Ltd. (MHVYF) and Parker-Hannifin (PH). 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.
Mitsubishi Heavy Industries, Ltd. has a Zacks Rank of #1 (Strong Buy), while Parker-Hannifin has a Zacks Rank of #3 (Hold) right now. Investors should feel comfortable knowing that MHVYF likely has seen a stronger improvement to its earnings outlook than PH 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 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.
MHVYF currently has a forward P/E ratio of 12.30, while PH has a forward P/E of 15.88. We also note that MHVYF has a PEG ratio of 0.47. 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. PH currently has a PEG ratio of 1.74.
Another notable valuation metric for MHVYF is its P/B ratio of 0.86. Investors use the P/B ratio to look at a stock's market value versus its book value, which is defined as total assets minus total liabilities. By comparison, PH has a P/B of 4.02.
Based on these metrics and many more, MHVYF holds a Value grade of B, while PH has a Value grade of C.
MHVYF 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 MHVYF is likely the superior value option right now.
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Mitsubishi Heavy Industries, Ltd. (MHVYF) : Free Stock Analysis Report
Parker-Hannifin Corporation (PH) : Free Stock Analysis Report
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