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UTX vs. DHR: Which Stock Should Value Investors Buy Now?

Zacks Equity Research
First Solar (FSLR) possesses the right combination of the two key ingredients for a likely earnings beat in its upcoming report. Get prepared with the key expectations.

Investors looking for stocks in the Diversified Operations sector might want to consider either United Technologies (UTX) or Danaher (DHR). But which of these two companies is the best option for those looking for undervalued stocks? Let's 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.

United Technologies has a Zacks Rank of #2 (Buy), while Danaher has a Zacks Rank of #3 (Hold) right now. This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that UTX is likely seeing its earnings outlook improve to a greater extent. But this is only part of the picture for value investors.

Value investors are also interested in a number of tried-and-true valuation metrics that help show when a company is undervalued at its 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.

UTX currently has a forward P/E ratio of 16.01, while DHR has a forward P/E of 26.91. We also note that UTX has a PEG ratio of 1.82. 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. DHR currently has a PEG ratio of 2.36.

Another notable valuation metric for UTX is its P/B ratio of 2.50. 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, DHR has a P/B of 3.18.

These are just a few of the metrics contributing to UTX's Value grade of B and DHR's Value grade of D.

UTX sticks out from DHR in both our Zacks Rank and Style Scores models, so value investors will likely feel that UTX is the better option right now.


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United Technologies Corporation (UTX) : Free Stock Analysis Report
 
Danaher Corporation (DHR) : Free Stock Analysis Report
 
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