- Oops!Something went wrong.Please try again later.
Investors with an interest in Manufacturing - Electronics stocks have likely encountered both Regal Beloit (RRX) and Eaton (ETN). 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.
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.
Currently, Regal Beloit has a Zacks Rank of #2 (Buy), while Eaton has a Zacks Rank of #3 (Hold). The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that RRX 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.
RRX currently has a forward P/E ratio of 10.42, while ETN has a forward P/E of 16.75. We also note that RRX has a PEG ratio of 1.04. This figure is similar to the commonly-used P/E ratio, with the PEG ratio also factoring in a company's expected earnings growth rate. ETN currently has a PEG ratio of 1.52.
Another notable valuation metric for RRX is its P/B ratio of 1.15. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. For comparison, ETN has a P/B of 3.01.
These are just a few of the metrics contributing to RRX's Value grade of B and ETN's Value grade of C.
RRX stands above ETN thanks to its solid earnings outlook, and based on these valuation figures, we also feel that RRX is the superior value option right now.