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RBC vs. FLOW: Which Stock Is the Better Value Option?

Zacks Equity Research
·2 min read

Investors looking for stocks in the Manufacturing - Electronics sector might want to consider either Regal Beloit (RBC) or SPX Flow (FLOW). 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.

Right now, Regal Beloit is sporting a Zacks Rank of #2 (Buy), while SPX Flow has a Zacks Rank of #3 (Hold). This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that RBC is likely seeing its earnings outlook improve to a greater extent. However, value investors will care about much more than just this.

Value investors also try to analyze a wide range of traditional figures and metrics to help determine whether a company is undervalued at its 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 18.74, while FLOW has a forward P/E of 40.13. We also note that RBC has a PEG ratio of 1.87. 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. FLOW currently has a PEG ratio of 7.42.

Another notable valuation metric for RBC is its P/B ratio of 1.73. 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, FLOW has a P/B of 1.88.

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

RBC sticks out from FLOW 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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Zacks Investment Research