We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
RBC vs. AOS: Which Stock Is the Better Value Option?
Read MoreHide Full Article
Investors interested in stocks from the Manufacturing - Electronics sector have probably already heard of Regal Beloit (RBC - Free Report) and A.O. Smith (AOS - Free Report) . But which of these two companies is the best option for those looking for undervalued stocks? Let's take a closer look.
There are plenty of strategies for discovering value stocks, but we have found that pairing a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system produces the best returns. The proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.
Currently, Regal Beloit has a Zacks Rank of #2 (Buy), while A.O. Smith has a Zacks Rank of #4 (Sell). This means that RBC's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. 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.
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 20.44, while AOS has a forward P/E of 29.68. We also note that RBC has a PEG ratio of 2.04. 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. AOS currently has a PEG ratio of 3.71.
Another notable valuation metric for RBC is its P/B ratio of 1.64. 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, AOS has a P/B of 6.18.
These metrics, and several others, help RBC earn a Value grade of B, while AOS has been given a Value grade of C.
RBC has seen stronger estimate revision activity and sports more attractive valuation metrics than AOS, so it seems like value investors will conclude that RBC is the superior option right now.
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
RBC vs. AOS: Which Stock Is the Better Value Option?
Investors interested in stocks from the Manufacturing - Electronics sector have probably already heard of Regal Beloit (RBC - Free Report) and A.O. Smith (AOS - Free Report) . But which of these two companies is the best option for those looking for undervalued stocks? Let's take a closer look.
There are plenty of strategies for discovering value stocks, but we have found that pairing a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system produces the best returns. The proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.
Currently, Regal Beloit has a Zacks Rank of #2 (Buy), while A.O. Smith has a Zacks Rank of #4 (Sell). This means that RBC's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. 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.
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 20.44, while AOS has a forward P/E of 29.68. We also note that RBC has a PEG ratio of 2.04. 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. AOS currently has a PEG ratio of 3.71.
Another notable valuation metric for RBC is its P/B ratio of 1.64. 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, AOS has a P/B of 6.18.
These metrics, and several others, help RBC earn a Value grade of B, while AOS has been given a Value grade of C.
RBC has seen stronger estimate revision activity and sports more attractive valuation metrics than AOS, so it seems like value investors will conclude that RBC is the superior option right now.