GEN vs. TT: Which Stock Is the Better Value Option?
Investors looking for stocks in the Technology Services sector might want to consider either Gen Digital (GEN) or Trane Technologies (TT). But which of these two companies is the best option for those looking for undervalued stocks? 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 Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.
Gen Digital and Trane Technologies are sporting Zacks Ranks of #2 (Buy) and #3 (Hold), respectively, right now. This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that GEN 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 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.
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.
GEN currently has a forward P/E ratio of 11.11, while TT has a forward P/E of 31.75. We also note that GEN has a PEG ratio of 1.09. 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. TT currently has a PEG ratio of 2.64.
Another notable valuation metric for GEN is its P/B ratio of 7.22. 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, TT has a P/B of 10.88.
These are just a few of the metrics contributing to GEN's Value grade of A and TT's Value grade of C.
GEN has seen stronger estimate revision activity and sports more attractive valuation metrics than TT, so it seems like value investors will conclude that GEN is the superior option right now.
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