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.
Value investing is easily one of the most popular ways to find great stocks in any market environment. After all, who wouldn’t want to find stocks that are either flying under the radar and are compelling buys, or offer up tantalizing discounts when compared to fair value?
One way to find these companies is by looking at several key metrics and financial ratios, many of which are crucial in the value stock selection process. Let’s put Regal Beloit Corporation (RBC - Free Report) stock into this equation and find out if it is a good choice for value-oriented investors right now, or if investors subscribing to this methodology should look elsewhere for top picks:
PE Ratio
A key metric that value investors always look at is the Price to Earnings Ratio, or PE for short. This shows us how much investors are willing to pay for each dollar of earnings in a given stock, and is easily one of the most popular financial ratios in the world. The best use of the PE ratio is to compare the stock’s current PE ratio with: a) where this ratio has been in the past; b) how it compares to the average for the industry/sector; and c) how it compares to the market as a whole.
On this front, Regal Beloit has a trailing twelve months PE ratio of 15.15, as you can see in the chart below:
This level actually compares pretty favorably with the market at large, as the PE for the S&P 500 stands at about 19.61. If we focus on the long-term PE trend, Regal Beloit’s current PE level is slightly above its midpoint over the past five years, with the number having risen rapidly over the past few months.
Further, the stock’s PE also compares favorably with the Zacks classified Machinery-Electrical industry’s trailing twelve months PE ratio, which stands at 18.24. At the very least, this indicates that the stock is relatively undervalued right now, compared to its peers.
We should also point out that Regal Beloit has a forward PE ratio (price relative to this year’s earnings) of just 14.42, so it is fair to say that a slightly more value-oriented path may be ahead for Santander stock in the near term too.
P/S Ratio
Another key metric to note is the Price/Sales ratio. This approach compares a given stock’s price to its total sales, where a lower reading is generally considered better. Some people like this metric more than other value-focused ones because it looks at sales, something that is far harder to manipulate with accounting tricks than earnings.
Right now, Regal Beloit has a P/S ratio of about 0.94. This is quite lower than the S&P 500 average, which comes in at 2.75 right now. Also, as we can see in the chart below, this is a tad lower than the highs for this stock in particular over the past few years.
In comparison to its own trend, the stock is trading at its median range in the time period from a P/S metric. This does not provide us with a conclusive direction as to enter or not to enter.
Broad Value Outlook
In aggregate, Regal Beloit currently has a Zacks Value Style Score of ‘A’, putting it into the top 20% of all stocks we cover from this look. This makes Regal Beloit a solid choice for value investors, and some of its other key metrics make this pretty clear too.
The PEG ratio for Regal Beloit is just 1.31, a level that is a bit lower than the industry average of 1.50. The PEG ratio is a modified PE ratio that takes into account the stock’s earnings growth rate. Additionally, the P/CF ratio (another great indicator of value) comes in at 6.74, which is far better than the industry average of 10.28. Clearly, Regal Beloit is a solid choice on the value front from multiple angles.
What About the Stock Overall?
Though Regal Beloit might be a good choice for value investors, there are plenty of other factors to consider before investing in this name. In particular, it is worth noting that the company has a Growth grade of ‘B’ and a Momentum score of ‘F’. This gives RBC a Zacks VGM score—or its overarching fundamental grade—of ‘A’. (You can read more about the Zacks Style Scores here >>)
Meanwhile, the company’s recent earnings estimates have been mixed at best. The current quarter has seen four estimates go lower in the past sixty days compared to two upward revisions, while the full year estimate has seen five upward revisions and one downward revision in the same time period.
This has had a mixed impact on the consensus estimate as well, as the current quarter consensus estimate has declined 1.9% in the past two months, while the full year estimate has gone up by 0.9% over the same time frame.
You can see the consensus estimate trend and recent price action for the stock in the chart below:
This mixed trend indicates that while the stock’s growth story is intact over the medium term, analysts have some apprehensions about the stock in the immediate future.
Bottom Line
Regal Beloit is an inspired choice for value investors, as it is hard to beat its incredible lineup of statistics on this front. However, with a sluggish industry rank (Bottom43% out of more than 250 industries) and a Zacks Rank #3 (Hold), it is hard to get too excited about this company overall. In fact, over the past four years, the Zacks Machinery-Electrical industry has clearly underperformed the broader market, as you can see below:
So, value investors might want to wait for estimates and analyst sentiment to turn around in this name first, but once that happens, this stock could be a compelling pick.
Zacks' Top 10 Stocks for 2017
In addition to the stocks discussed above, would you like to know about our 10 finest buy-and-hold tickers for the entirety of 2017?
Who wouldn't? As of early December, the 2016 Top 10 produced 5 double-digit winners including oil and natural gas giant Pioneer Natural Resources which racked up a stellar +50% gain. The new list is painstakingly hand-picked from 4,400 companies covered by the Zacks Rank. Be among the very first to see it>>
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
Is Regal Beloit a Good Value Pick at the Moment?
Value investing is easily one of the most popular ways to find great stocks in any market environment. After all, who wouldn’t want to find stocks that are either flying under the radar and are compelling buys, or offer up tantalizing discounts when compared to fair value?
One way to find these companies is by looking at several key metrics and financial ratios, many of which are crucial in the value stock selection process. Let’s put Regal Beloit Corporation (RBC - Free Report) stock into this equation and find out if it is a good choice for value-oriented investors right now, or if investors subscribing to this methodology should look elsewhere for top picks:
PE Ratio
A key metric that value investors always look at is the Price to Earnings Ratio, or PE for short. This shows us how much investors are willing to pay for each dollar of earnings in a given stock, and is easily one of the most popular financial ratios in the world. The best use of the PE ratio is to compare the stock’s current PE ratio with: a) where this ratio has been in the past; b) how it compares to the average for the industry/sector; and c) how it compares to the market as a whole.
On this front, Regal Beloit has a trailing twelve months PE ratio of 15.15, as you can see in the chart below:
We should also point out that Regal Beloit has a forward PE ratio (price relative to this year’s earnings) of just 14.42, so it is fair to say that a slightly more value-oriented path may be ahead for Santander stock in the near term too.
P/S Ratio
Another key metric to note is the Price/Sales ratio. This approach compares a given stock’s price to its total sales, where a lower reading is generally considered better. Some people like this metric more than other value-focused ones because it looks at sales, something that is far harder to manipulate with accounting tricks than earnings.
Right now, Regal Beloit has a P/S ratio of about 0.94. This is quite lower than the S&P 500 average, which comes in at 2.75 right now. Also, as we can see in the chart below, this is a tad lower than the highs for this stock in particular over the past few years.
In comparison to its own trend, the stock is trading at its median range in the time period from a P/S metric. This does not provide us with a conclusive direction as to enter or not to enter.
Broad Value Outlook
In aggregate, Regal Beloit currently has a Zacks Value Style Score of ‘A’, putting it into the top 20% of all stocks we cover from this look. This makes Regal Beloit a solid choice for value investors, and some of its other key metrics make this pretty clear too.
The PEG ratio for Regal Beloit is just 1.31, a level that is a bit lower than the industry average of 1.50. The PEG ratio is a modified PE ratio that takes into account the stock’s earnings growth rate. Additionally, the P/CF ratio (another great indicator of value) comes in at 6.74, which is far better than the industry average of 10.28. Clearly, Regal Beloit is a solid choice on the value front from multiple angles.
What About the Stock Overall?
Though Regal Beloit might be a good choice for value investors, there are plenty of other factors to consider before investing in this name. In particular, it is worth noting that the company has a Growth grade of ‘B’ and a Momentum score of ‘F’. This gives RBC a Zacks VGM score—or its overarching fundamental grade—of ‘A’. (You can read more about the Zacks Style Scores here >>)
Meanwhile, the company’s recent earnings estimates have been mixed at best. The current quarter has seen four estimates go lower in the past sixty days compared to two upward revisions, while the full year estimate has seen five upward revisions and one downward revision in the same time period.
This has had a mixed impact on the consensus estimate as well, as the current quarter consensus estimate has declined 1.9% in the past two months, while the full year estimate has gone up by 0.9% over the same time frame.
You can see the consensus estimate trend and recent price action for the stock in the chart below:
REGAL BELOIT Price and Consensus
REGAL BELOIT Price and Consensus | REGAL BELOIT Quote
This mixed trend indicates that while the stock’s growth story is intact over the medium term, analysts have some apprehensions about the stock in the immediate future.
Bottom Line
Regal Beloit is an inspired choice for value investors, as it is hard to beat its incredible lineup of statistics on this front. However, with a sluggish industry rank (Bottom43% out of more than 250 industries) and a Zacks Rank #3 (Hold), it is hard to get too excited about this company overall. In fact, over the past four years, the Zacks Machinery-Electrical industry has clearly underperformed the broader market, as you can see below:
So, value investors might want to wait for estimates and analyst sentiment to turn around in this name first, but once that happens, this stock could be a compelling pick.
Zacks' Top 10 Stocks for 2017
In addition to the stocks discussed above, would you like to know about our 10 finest buy-and-hold tickers for the entirety of 2017?
Who wouldn't? As of early December, the 2016 Top 10 produced 5 double-digit winners including oil and natural gas giant Pioneer Natural Resources which racked up a stellar +50% gain. The new list is painstakingly hand-picked from 4,400 companies covered by the Zacks Rank. Be among the very first to see it>>