Investors interested in stocks from the Manufacturing - General Industrial sector have probably already heard of Mitsubishi Heavy Industries, Ltd. (MHVYF) and Parker-Hannifin (PH). But which of these two companies is the best option for those looking for undervalued stocks? Let's take a closer look.
We have found that the best way to discover great value opportunities is to pair a strong Zacks Rank with a great grade in the Value category of our Style Scores system. 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.
Mitsubishi Heavy Industries, Ltd. has a Zacks Rank of #1 (Strong Buy), while Parker-Hannifin has a Zacks Rank of #3 (Hold) right now. The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that MHVYF has an improving earnings outlook. However, value investors will care about much more than just this.
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.
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.
MHVYF currently has a forward P/E ratio of 12.70, while PH has a forward P/E of 18.26. We also note that MHVYF has a PEG ratio of 0.49. 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. PH currently has a PEG ratio of 2.
Another notable valuation metric for MHVYF is its P/B ratio of 0.89. 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, PH has a P/B of 4.19.
Based on these metrics and many more, MHVYF holds a Value grade of B, while PH has a Value grade of C.
MHVYF has seen stronger estimate revision activity and sports more attractive valuation metrics than PH, so it seems like value investors will conclude that MHVYF is the superior 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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