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.
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 Zacks Rank is a proven strategy that targets companies with positive earnings estimate revision trends, while our Style Scores work to grade companies based on specific traits.
Right now, Franklin Electric is sporting a Zacks Rank of #2 (Buy), while Schneider Electric SE has a Zacks Rank of #5 (Strong Sell). Investors should feel comfortable knowing that FELE likely has seen a stronger improvement to its earnings outlook than SBGSY has recently. However, value investors will care about much more than just this.
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 Value category of the Style Scores system identifies undervalued companies by looking at a number of key metrics. These include the long-favored P/E ratio, P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that help us determine a company's fair value.
FELE currently has a forward P/E ratio of 23.70, while SBGSY has a forward P/E of 29.55. We also note that FELE has a PEG ratio of 1.97. 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. SBGSY currently has a PEG ratio of 2.05.
Another notable valuation metric for FELE is its P/B ratio of 3.46. Investors use the P/B ratio to look at a stock's market value versus its book value, which is defined as total assets minus total liabilities. By comparison, SBGSY has a P/B of 5.13.
Based on these metrics and many more, FELE holds a Value grade of B, while SBGSY has a Value grade of D.
FELE sticks out from SBGSY in both our Zacks Rank and Style Scores models, so value investors will likely feel that FELE is the better option right now.
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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).
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