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.
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 emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.
Currently, Mitsubishi Heavy Industries, Ltd. has a Zacks Rank of #1 (Strong Buy), while Parker-Hannifin has a Zacks Rank of #3 (Hold). This means that MHVYF's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. But this is just one factor that value investors are interested in.
Value investors analyze a variety of traditional, tried-and-true metrics to help find companies 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 14.60. We also note that MHVYF has a PEG ratio of 0.47. 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 1.60.
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 3.76.
These are just a few of the metrics contributing to MHVYF's Value grade of B and PH's Value grade of C.
MHVYF sticks out from PH in both our Zacks Rank and Style Scores models, so value investors will likely feel that MHVYF is the better 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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