Investors looking for stocks in the Manufacturing - Electronics sector might want to consider either Regal Beloit (RBC) or Franklin Electric (FELE). But which of these two stocks presents investors with the better value opportunity right now? Let's take a closer look.
The best way to find great value stocks is to pair a strong Zacks Rank with an impressive 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.
Right now, Regal Beloit is sporting a Zacks Rank of #2 (Buy), while Franklin Electric has a Zacks Rank of #4 (Sell). The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that RBC has an improving earnings outlook. But this is just one piece of the puzzle for value investors.
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 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.
RBC currently has a forward P/E ratio of 14.10, while FELE has a forward P/E of 20.44. We also note that RBC has a PEG ratio of 1.41. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. FELE currently has a PEG ratio of 2.41.
Another notable valuation metric for RBC is its P/B ratio of 1.57. 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, FELE has a P/B of 3.04.
These metrics, and several others, help RBC earn a Value grade of A, while FELE has been given a Value grade of C.
RBC has seen stronger estimate revision activity and sports more attractive valuation metrics than FELE, so it seems like value investors will conclude that RBC is the superior option right now.
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Regal Beloit Corporation (RBC) : Free Stock Analysis Report
Franklin Electric Co., Inc. (FELE) : Free Stock Analysis Report
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