Investors interested in stocks from the Industrial Services sector have probably already heard of Siemens AG (SIEGY) and W.W. Grainger (GWW). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.
The best way to find great value stocks is to pair a strong Zacks Rank with an impressive 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.
Siemens AG and W.W. Grainger are sporting Zacks Ranks of #2 (Buy) and #3 (Hold), respectively, right now. This means that SIEGY's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. However, value investors will care about much more than just this.
Value investors also tend to look at a number of traditional, tried-and-true figures to help them find stocks 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.
SIEGY currently has a forward P/E ratio of 18.89, while GWW has a forward P/E of 25.68. We also note that SIEGY has a PEG ratio of 2.26. 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. GWW currently has a PEG ratio of 2.73.
Another notable valuation metric for SIEGY is its P/B ratio of 2.93. Investors use the P/B ratio to look at a stock's market value versus its book value, which is defined as total assets minus total liabilities. By comparison, GWW has a P/B of 12.98.
These metrics, and several others, help SIEGY earn a Value grade of B, while GWW has been given a Value grade of D.
SIEGY stands above GWW thanks to its solid earnings outlook, and based on these valuation figures, we also feel that SIEGY is the superior value option right now.
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Siemens AG (SIEGY): Free Stock Analysis Report W.W. Grainger, Inc. (GWW): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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