POWL vs. ETN: Which Stock Should Value Investors Buy Now?
Investors looking for stocks in the Manufacturing - Electronics sector might want to consider either Powell Industries (POWL) or Eaton (ETN). But which of these two stocks presents investors with the better value opportunity right now? 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 proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
Right now, Powell Industries is sporting a Zacks Rank of #1 (Strong Buy), while Eaton has a Zacks Rank of #2 (Buy). The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that POWL 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.
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.
POWL currently has a forward P/E ratio of 18.33, while ETN has a forward P/E of 30.23. We also note that POWL has a PEG ratio of 1.31. 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. ETN currently has a PEG ratio of 2.57.
Another notable valuation metric for POWL is its P/B ratio of 4.51. 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, ETN has a P/B of 6.49.
Based on these metrics and many more, POWL holds a Value grade of B, while ETN has a Value grade of D.
POWL 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 POWL is likely the superior value option right now.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Powell Industries, Inc. (POWL) : Free Stock Analysis Report
Eaton Corporation, PLC (ETN) : Free Stock Analysis Report
