Investors looking for stocks in the Manufacturing - Electronics sector might want to consider either AZZ (AZZ) or 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.
The best way to find great value stocks is to pair a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system. 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.
AZZ has a Zacks Rank of #2 (Buy), while Eaton has a Zacks Rank of #3 (Hold) right now. Investors should feel comfortable knowing that AZZ likely has seen a stronger improvement to its earnings outlook than ETN has recently. But this is just one factor that value investors are interested in.
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.
AZZ currently has a forward P/E ratio of 13.73, while ETN has a forward P/E of 22.23. We also note that AZZ has a PEG ratio of 0.98. 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 2.13.
Another notable valuation metric for AZZ is its P/B ratio of 2.29. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. For comparison, ETN has a P/B of 5.69.
These are just a few of the metrics contributing to AZZ's Value grade of A and ETN's Value grade of C.
AZZ sticks out from ETN in both our Zacks Rank and Style Scores models, so value investors will likely feel that AZZ is the better option right now.
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AZZ Inc. (AZZ): 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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