Investors with an interest in Diversified Operations stocks have likely encountered both Marubeni Corp. (MARUY) and Federal Signal (FSS). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.
Everyone has their own methods for finding great value opportunities, but our model includes pairing an impressive grade in the Value category of our Style Scores system with a strong Zacks Rank. The proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
Marubeni Corp. and Federal Signal are sporting Zacks Ranks of #1 (Strong Buy) and #2 (Buy), respectively, right now. This means that MARUY's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. But this is just one factor that value investors are interested in.
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.
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.
MARUY currently has a forward P/E ratio of 10.10, while FSS has a forward P/E of 31.42. We also note that MARUY has a PEG ratio of 1.56. 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. FSS currently has a PEG ratio of 2.24.
Another notable valuation metric for MARUY is its P/B ratio of 1.44. 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, FSS has a P/B of 6.04.
These are just a few of the metrics contributing to MARUY's Value grade of A and FSS's Value grade of D.
MARUY sticks out from FSS in both our Zacks Rank and Style Scores models, so value investors will likely feel that MARUY is the better option right now.
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Marubeni Corp. (MARUY): Free Stock Analysis Report Federal Signal Corporation (FSS): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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