RXN or AOS: Which Is the Better Value Stock Right Now?
Investors looking for stocks in the Manufacturing - Electronics sector might want to consider either Rexnord (RXN) or A.O. Smith (AOS). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.
There are plenty of strategies for discovering value stocks, but we have found that pairing a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system produces the best returns. The proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.
Rexnord has a Zacks Rank of #1 (Strong Buy), while A.O. Smith has a Zacks Rank of #2 (Buy) right now. This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that RXN is likely seeing its earnings outlook improve to a greater extent. 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.
RXN currently has a forward P/E ratio of 18.53, while AOS has a forward P/E of 27.10. We also note that RXN has a PEG ratio of 2.54. 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. AOS currently has a PEG ratio of 3.39.
Another notable valuation metric for RXN is its P/B ratio of 2.63. 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, AOS has a P/B of 4.71.
Based on these metrics and many more, RXN holds a Value grade of B, while AOS has a Value grade of D.
RXN stands above AOS thanks to its solid earnings outlook, and based on these valuation figures, we also feel that RXN is the superior value option right now.
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Rexnord Corporation (RXN) : Free Stock Analysis Report
A. O. Smith Corporation (AOS) : Free Stock Analysis Report
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