RRX or TRMB: Which Is the Better Value Stock Right Now?

Investors looking for stocks in the Manufacturing - General Industrial sector might want to consider either Regal Rexnord (RRX) or Trimble Navigation (TRMB). But which of these two stocks presents investors with the better value opportunity right now? Let's 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.

Regal Rexnord and Trimble Navigation 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. However, value investors will care about much more than just this.

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 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.

RRX currently has a forward P/E ratio of 15.10, while TRMB has a forward P/E of 27.06. We also note that RRX has a PEG ratio of 1.51. 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. TRMB currently has a PEG ratio of 2.71.

Another notable valuation metric for RRX is its P/B ratio of 1.48. 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, TRMB has a P/B of 3.39.

These metrics, and several others, help RRX earn a Value grade of B, while TRMB has been given a Value grade of D.

Both RRX and TRMB are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that RRX is the superior value option right now.

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This article originally published on Zacks Investment Research (zacks.com).

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