TEX or CAT: Which Is the Better Value Stock Right Now?
Investors with an interest in Manufacturing - Construction and Mining stocks have likely encountered both Terex (TEX) and Caterpillar (CAT). 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 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 Terex and Caterpillar have a Zacks Rank of # 1 (Strong 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 only part of the picture for value investors.
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.
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.
TEX currently has a forward P/E ratio of 8.51, while CAT has a forward P/E of 14.26. We also note that TEX has a PEG ratio of 0.47. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. CAT currently has a PEG ratio of 1.19.
Another notable valuation metric for TEX is its P/B ratio of 2.79. 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, CAT has a P/B of 7.90.
These metrics, and several others, help TEX earn a Value grade of B, while CAT has been given a Value grade of C.
Both TEX and CAT are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that TEX is the superior value option right now.
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Terex Corporation (TEX) : Free Stock Analysis Report
Caterpillar Inc. (CAT) : Free Stock Analysis Report
