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RBC or ETN: Which Is the Better Value Stock Right Now?

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Investors interested in stocks from the Manufacturing - Electronics sector have probably already heard of Regal Beloit (RBC - Free Report) and Eaton (ETN - Free Report) . But which of these two stocks presents investors with the better value opportunity right now? Let's take a closer look.

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 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, both Regal Beloit and Eaton are sporting a Zacks Rank of # 2 (Buy). This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that these stocks have improving earnings outlooks. But this is just one piece of the puzzle for value investors.

Value investors analyze a variety of traditional, tried-and-true metrics to help find companies 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 19.05, while ETN has a forward P/E of 23.92. We also note that RBC has a PEG ratio of 1.91. 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 2.17.

Another notable valuation metric for RBC is its P/B ratio of 2.25. 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 3.91.

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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Eaton Corporation, PLC (ETN) - free report >>

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