RRX or ABB: Which Is the Better Value Stock Right Now?
RRX vs. ABB: Which Stock Is the Better Value Option?
Investors with an interest in Manufacturing - Electronics stocks have likely encountered both Regal Beloit (RRX) and ABB (ABB). But which of these two stocks presents investors with the better value opportunity right now? Let's 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.
Regal Beloit and ABB are sporting Zacks Ranks of #2 (Buy) and #5 (Strong Sell), respectively, right now. This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that RRX is likely seeing its earnings outlook improve to a greater extent. But this is only part of the picture for value investors.
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 Style Score Value grade factors in a variety of key fundamental metrics, including the popular P/E ratio, P/S ratio, earnings yield, cash flow per share, and a number of other key stats that are commonly used by value investors.
RRX currently has a forward P/E ratio of 16.69, while ABB has a forward P/E of 25.99. We also note that RRX has a PEG ratio of 1.67. 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 4.19.
Another notable valuation metric for RRX is its P/B ratio of 4.24. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. For comparison, ABB has a P/B of 5.52.
Based on these metrics and many more, RRX holds a Value grade of B, while ABB has a Value grade of D.
RRX is currently sporting an improving earnings outlook, which makes it stick out in our Zacks Rank model. And, based on the above valuation metrics, we feel that RRX is likely the superior value option right now.
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