Investors interested in Diversified Operations stocks are likely familiar with Sumitomo Corp. (SSUMY) and Honeywell International Inc. (HON). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.
We have found that the best way to discover great value opportunities is to pair a strong Zacks Rank with a great 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.
Right now, Sumitomo Corp. is sporting a Zacks Rank of #2 (Buy), while Honeywell International Inc. has a Zacks Rank of #3 (Hold). The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that SSUMY has an improving earnings outlook. But this is just one factor that value investors are interested in.
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.
SSUMY currently has a forward P/E ratio of 13.37, while HON has a forward P/E of 23.47. We also note that SSUMY has a PEG ratio of 1.55. This figure is similar to the commonly-used P/E ratio, with the PEG ratio also factoring in a company's expected earnings growth rate. HON currently has a PEG ratio of 3.58.
Another notable valuation metric for SSUMY is its P/B ratio of 1.63. 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, HON has a P/B of 10.32.
These are just a few of the metrics contributing to SSUMY's Value grade of B and HON's Value grade of D.
SSUMY stands above HON thanks to its solid earnings outlook, and based on these valuation figures, we also feel that SSUMY is the superior value option right now.
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Sumitomo Corp. (SSUMY): Free Stock Analysis Report Honeywell International Inc. (HON): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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