Investors with an interest in Manufacturing - Electronics stocks have likely encountered both Powell Industries (POWL) and 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.
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, Powell Industries is sporting a Zacks Rank of #1 (Strong Buy), while Eaton has a Zacks Rank of #2 (Buy). Investors should feel comfortable knowing that POWL likely has seen a stronger improvement to its earnings outlook than ETN has recently. But this is only part of the picture 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.
Our Value category highlights undervalued companies by looking at a variety of key metrics, including the popular P/E ratio, as well as the P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that have been used by value investors for years.
POWL currently has a forward P/E ratio of 13.70, while ETN has a forward P/E of 27.02. We also note that POWL has a PEG ratio of 0.98. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. ETN currently has a PEG ratio of 2.26.
Another notable valuation metric for POWL is its P/B ratio of 4.52. 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, ETN has a P/B of 5.94.
These are just a few of the metrics contributing to POWL's Value grade of B and ETN's Value grade of C.
POWL sticks out from ETN in both our Zacks Rank and Style Scores models, so value investors will likely feel that POWL is the better option right now.
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Free: See Our Top Stock And 4 Runners UpPowell Industries, Inc. (POWL) : Free Stock Analysis Report
Eaton Corporation, PLC (ETN) : Free Stock Analysis Report
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
