Investors with an interest in Manufacturing - General Industrial stocks have likely encountered both 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 favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies 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 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.
Our Value category grades stocks based on a number of key metrics, including the tried-and-true P/E ratio, the P/S ratio, earnings yield, and cash flow per share, as well as a variety of other fundamentals that value investors frequently use.
MHVYF currently has a forward P/E ratio of 14.53, while PH has a forward P/E of 14.88. We also note that MHVYF has a PEG ratio of 0.56. 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 1.63.
Another notable valuation metric for MHVYF is its P/B ratio of 0.87. 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, PH has a P/B of 3.82.
These metrics, and several others, help MHVYF earn a Value grade of A, while PH has been given a 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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