Investors interested in Manufacturing - Electronics stocks are likely familiar with Franklin Electric (FELE) and Schneider Electric SE (SBGSY). 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 proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.
Franklin Electric has a Zacks Rank of #2 (Buy), while Schneider Electric SE has a Zacks Rank of #5 (Strong Sell) right now. This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that FELE is likely seeing its earnings outlook improve to a greater extent. But this is just one piece of the puzzle 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.
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.
FELE currently has a forward P/E ratio of 23.76, while SBGSY has a forward P/E of 28.85. We also note that FELE has a PEG ratio of 1.98. 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. SBGSY currently has a PEG ratio of 2.00.
Another notable valuation metric for FELE is its P/B ratio of 3.47. 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, SBGSY has a P/B of 5.
These are just a few of the metrics contributing to FELE's Value grade of B and SBGSY's Value grade of D.
FELE has seen stronger estimate revision activity and sports more attractive valuation metrics than SBGSY, so it seems like value investors will conclude that FELE is the superior option right now.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Franklin Electric Co., Inc. (FELE): Free Stock Analysis Report Schneider Electric SE (SBGSY): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
Zacks Investment Research
