Investors interested in stocks from the Manufacturing - Electronics sector have probably already heard of Regal Beloit (RBC) and ABB (ABB). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.
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 proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
Currently, both Regal Beloit and ABB are holding a Zacks Rank of # 2 (Buy). This means that both companies have witnessed positive earnings estimate revisions, so investors should feel comfortable knowing that both of these stocks have an improving earnings outlook. 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 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.
RBC currently has a forward P/E ratio of 21.45, while ABB has a forward P/E of 32.04. We also note that RBC has a PEG ratio of 2.14. 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. ABB currently has a PEG ratio of 5.17.
Another notable valuation metric for RBC is its P/B ratio of 1.73. 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, ABB has a P/B of 4.42.
These are just a few of the metrics contributing to RBC's Value grade of B and ABB's Value grade of C.
Both RBC and ABB are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that RBC is the superior value option right now.
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Regal Beloit Corporation (RBC): Free Stock Analysis Report
ABB Ltd (ABB): 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.