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RBC vs. ETN: Which Stock Should Value Investors Buy Now?

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Investors with an interest in Manufacturing - Electronics stocks have likely encountered both Regal Beloit (RBC) and Eaton (ETN). But which of these two stocks presents investors with the better value opportunity right now? Let's take a closer look.

Everyone has their own methods for finding great value opportunities, but our model includes pairing an impressive grade in the Value category of our Style Scores system with a strong Zacks Rank. 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.

Both Regal Beloit and Eaton have a Zacks Rank of # 2 (Buy) right now. The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that both of these companies have improving earnings outlooks. However, value investors will care about much more than just this.

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.

Our Value category highlights undervalued companies by looking at a variety of key metrics, including the popular P/E ratio, as well as the P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that have been used by value investors for years.

RBC currently has a forward P/E ratio of 20.13, while ETN has a forward P/E of 23.93. We also note that RBC has a PEG ratio of 2.01. 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 2.18.

Another notable valuation metric for RBC is its P/B ratio of 2.27. 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, ETN has a P/B of 3.62.

These metrics, and several others, help RBC earn a Value grade of B, while ETN has been given a Value grade of C.

Both RBC and ETN are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that RBC is the superior value option right now.


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Regal Beloit Corporation (RBC) : Free Stock Analysis Report
 
Eaton Corporation, PLC (ETN) : Free Stock Analysis Report
 
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