Investors interested in stocks from the Manufacturing - General Industrial sector have probably already heard of Regal Rexnord (RRX) and Trimble Navigation (TRMB). But which of these two stocks presents investors with the better value opportunity right now? Let's take a closer look.
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 proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
Regal Rexnord and Trimble Navigation are sporting Zacks Ranks of #2 (Buy) and #4 (Sell), respectively, right now. The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that RRX has an improving earnings outlook. 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.
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.
RRX currently has a forward P/E ratio of 15.15, while TRMB has a forward P/E of 27.35. We also note that RRX has a PEG ratio of 1.52. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. TRMB currently has a PEG ratio of 2.74.
Another notable valuation metric for RRX is its P/B ratio of 1.54. The P/B is a method of comparing a stock's market value to its book value, which is defined as total assets minus total liabilities. By comparison, TRMB has a P/B of 3.49.
These metrics, and several others, help RRX earn a Value grade of B, while TRMB has been given a Value grade of D.
RRX stands above TRMB thanks to its solid earnings outlook, and based on these valuation figures, we also feel that RRX is the superior value option right now.
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Regal Rexnord Corporation (RRX): Free Stock Analysis Report Trimble Inc. (TRMB): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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