UTX vs. DHR: Which Stock Should Value Investors Buy Now?
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 stocks offers value investors a better bang for their buck right now? We'll need to 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 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 and Danaher are both sporting 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 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.
UTX currently has a forward P/E ratio of 16.40, while DHR has a forward P/E of 29.43. We also note that UTX has a PEG ratio of 1.86. 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. DHR currently has a PEG ratio of 2.54.
Another notable valuation metric for UTX is its P/B ratio of 2.64. 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, DHR has a P/B of 3.30.
Based on these metrics and many more, UTX holds a Value grade of B, while DHR has a Value grade of D.
Both UTX and DHR are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that UTX is the superior value option right now.
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United Technologies Corporation (UTX) : Free Stock Analysis Report
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