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Global X U.S. Cash Flow Kings 100 ETF (FLOW) - free report >>
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Global X U.S. Cash Flow Kings 100 ETF (FLOW) - free report >>
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FLOW vs. ABB: Which Stock Is the Better Value Option?
Investors interested in Manufacturing - Electronics stocks are likely familiar with SPX Flow (FLOW - Free Report) and ABB . But which of these two stocks offers value investors a better bang for their buck right now? We'll need to 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 favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.
Right now, SPX Flow is sporting a Zacks Rank of #1 (Strong Buy), while ABB has a Zacks Rank of #2 (Buy). This means that FLOW's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. However, value investors will care about much more than just this.
Value investors are also interested in a number of tried-and-true valuation metrics that help show when a company is undervalued at its current share price levels.
The Value category of the Style Scores system identifies undervalued companies by looking at a number of key metrics. These include the long-favored P/E ratio, P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that help us determine a company's fair value.
FLOW currently has a forward P/E ratio of 23.31, while ABB has a forward P/E of 23.52. We also note that FLOW has a PEG ratio of 2.54. This popular figure is similar to the widely-used P/E ratio, but the PEG ratio also considers a company's expected EPS growth rate. ABB currently has a PEG ratio of 3.79.
Another notable valuation metric for FLOW is its P/B ratio of 2.08. 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, ABB has a P/B of 3.80.
These metrics, and several others, help FLOW earn a Value grade of B, while ABB has been given a Value grade of C.
FLOW stands above ABB thanks to its solid earnings outlook, and based on these valuation figures, we also feel that FLOW is the superior value option right now.