Investors interested in Manufacturing – Electronics stocks are likely familiar with Regal Beloit (RBC) and Eaton (ETN). 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 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.
Currently, both Regal Beloit and Eaton are holding a Zacks Rank of # 2 (Buy). The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that both of these companies have improving earnings outlooks. But this is only part of the picture for value investors.
Value investors also tend to look at a number of traditional, tried-and-true figures to help them find stocks 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.
RBC currently has a forward P/E ratio of 17.10, while ETN has a forward P/E of 24.48. We also note that RBC has a PEG ratio of 1.71. 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. ETN currently has a PEG ratio of 2.23.
Another notable valuation metric for RBC is its P/B ratio of 2.28. 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, ETN has a P/B of 4.31.
These are just a few of the metrics contributing to RBC’s Value grade of B and ETN’s Value grade of D.
Both RBC and ETN 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
Eaton Corporation, PLC (ETN) : Free Stock Analysis Report
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