TKR vs. SMCAY: Which Stock Is the Better Value Option?

Investors interested in Electronics - Miscellaneous Products stocks are likely familiar with Timken (TKR) and Smc Corporation (SMCAY). 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 Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.

Timken has a Zacks Rank of #2 (Buy), while Smc Corporation has a Zacks Rank of #4 (Sell) right now. Investors should feel comfortable knowing that TKR likely has seen a stronger improvement to its earnings outlook than SMCAY has recently. But this is only part of the picture for value investors.

Value investors analyze a variety of traditional, tried-and-true metrics to help find companies 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.

TKR currently has a forward P/E ratio of 13.75, while SMCAY has a forward P/E of 21.10. We also note that TKR has a PEG ratio of 1.59. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. SMCAY currently has a PEG ratio of 3.91.

Another notable valuation metric for TKR is its P/B ratio of 1.54. 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, SMCAY has a P/B of 1.65.

These are just a few of the metrics contributing to TKR's Value grade of A and SMCAY's Value grade of C.

TKR sticks out from SMCAY in both our Zacks Rank and Style Scores models, so value investors will likely feel that TKR is the better option right now.

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

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