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AZZ vs. ABBNY: Which Stock Is the Better Value Option?

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Investors interested in Manufacturing - Electronics stocks are likely familiar with AZZ (AZZ - Free Report) and ABB (ABBNY - 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 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, AZZ has a Zacks Rank of #1 (Strong Buy), while ABB has 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 AZZ has an improving earnings outlook. But this is just one piece of the puzzle 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 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.

AZZ currently has a forward P/E ratio of 15.90, while ABBNY has a forward P/E of 26.85. We also note that AZZ has a PEG ratio of 1.14. 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. ABBNY currently has a PEG ratio of 3.18.

Another notable valuation metric for AZZ is its P/B ratio of 2.76. The P/B ratio is used to compare a stock's market value with its book value, which is defined as total assets minus total liabilities. For comparison, ABBNY has a P/B of 8.

These are just a few of the metrics contributing to AZZ's Value grade of B and ABBNY's Value grade of C.

AZZ has seen stronger estimate revision activity and sports more attractive valuation metrics than ABBNY, so it seems like value investors will conclude that AZZ is the superior option right now.


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