RBC or ETN: Which Is the Better Value Stock Right Now?
RBC vs. ETN: Which Stock Is the Better Value Option?
Investors interested in stocks from the Manufacturing - Electronics sector have probably already heard of Regal Beloit (RBC) and Eaton (ETN). But which of these two stocks presents investors with the better value opportunity right now? 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 favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.
Currently, both Regal Beloit and Eaton are holding 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 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.
RBC currently has a forward P/E ratio of 17.06, while ETN has a forward P/E of 24.66. We also note that RBC has a PEG ratio of 1.71. 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 2.24.
Another notable valuation metric for RBC is its P/B ratio of 2.27. 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 4.34.
Based on these metrics and many more, RBC holds a Value grade of B, while ETN has a Value grade of C.
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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Regal Beloit Corporation (RBC): Free Stock Analysis Report
Eaton Corporation, PLC (ETN): Free Stock Analysis Report
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