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ST or WTS: Which Is the Better Value Stock Right Now?

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·2 min read
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Investors looking for stocks in the Instruments - Control sector might want to consider either Sensata (ST) or Watts Water (WTS). But which of these two stocks presents investors with the better value opportunity right now? Let's take a closer look.

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 Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.

Both Sensata and Watts Water have a Zacks Rank of # 2 (Buy) right now. This means that both companies have witnessed positive earnings estimate revisions, so investors should feel comfortable knowing that both of these stocks have an improving earnings outlook. But this is just one factor that value investors are interested in.

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 grades stocks based on a number of key metrics, including the tried-and-true P/E ratio, the P/S ratio, earnings yield, and cash flow per share, as well as a variety of other fundamentals that value investors frequently use.

ST currently has a forward P/E ratio of 16.41, while WTS has a forward P/E of 32.44. We also note that ST has a PEG ratio of 1.49. 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. WTS currently has a PEG ratio of 4.05.

Another notable valuation metric for ST is its P/B ratio of 3.29. The P/B ratio is used to compare a stock's market value with its book value, which is defined as total assets minus total liabilities. For comparison, WTS has a P/B of 4.05.

These metrics, and several others, help ST earn a Value grade of B, while WTS has been given a Value grade of D.

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


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Sensata Technologies Holding N.V. (ST) : Free Stock Analysis Report
 
Watts Water Technologies, Inc. (WTS) : Free Stock Analysis Report
 
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