Investors interested in Manufacturing - Electronics stocks are likely familiar with Regal Beloit (RBC) and Franklin Electric (FELE). But which of these two stocks offers value investors a better bang for their buck right now? We'll need to 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 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.
Regal Beloit and Franklin Electric are sporting Zacks Ranks of #2 (Buy) and #3 (Hold), respectively, right now. This means that RBC'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.
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.
RBC currently has a forward P/E ratio of 13.24, while FELE has a forward P/E of 21.56. We also note that RBC has a PEG ratio of 1.32. This popular figure is similar to the widely-used P/E ratio, but the PEG ratio also considers a company's expected EPS growth rate. FELE currently has a PEG ratio of 4.31.
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 3.29.
These are just a few of the metrics contributing to RBC's Value grade of A and FELE's Value grade of C.
RBC sticks out from FELE in both our Zacks Rank and Style Scores models, so value investors will likely feel that RBC is the better 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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