Investors interested in Manufacturing - Electronics stocks are likely familiar with Powell Industries (POWL) and Eaton (ETN). 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.
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 emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.
Currently, Powell Industries has a Zacks Rank of #2 (Buy), while Eaton has a Zacks Rank of #3 (Hold). Investors should feel comfortable knowing that POWL likely has seen a stronger improvement to its earnings outlook than ETN has recently. But this is just one piece of the puzzle 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.
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.
POWL currently has a forward P/E ratio of 17.95, while ETN has a forward P/E of 28.65. We also note that POWL has a PEG ratio of 1.28. 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. ETN currently has a PEG ratio of 2.55.
Another notable valuation metric for POWL is its P/B ratio of 5.24. 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, ETN has a P/B of 7.22.
Based on these metrics and many more, POWL holds a Value grade of B, while ETN has a Value grade of D.
POWL has seen stronger estimate revision activity and sports more attractive valuation metrics than ETN, so it seems like value investors will conclude that POWL is the superior option right now.
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Powell Industries, Inc. (POWL): Free Stock Analysis Report Eaton Corporation, PLC (ETN): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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