Investors interested in Manufacturing - Electronics stocks are likely familiar with EnerSys (ENS) and ABB (ABBNY). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.
Everyone has their own methods for finding great value opportunities, but our model includes pairing an impressive grade in the Value category of our Style Scores system with a strong Zacks Rank. 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, EnerSys has a Zacks Rank of #2 (Buy), while ABB has a Zacks Rank of #3 (Hold). This means that ENS'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 analyze a variety of traditional, tried-and-true metrics to help find companies that they believe are undervalued at their 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.
ENS currently has a forward P/E ratio of 10.05, while ABBNY has a forward P/E of 22.59. We also note that ENS has a PEG ratio of 0.56. This figure is similar to the commonly-used P/E ratio, with the PEG ratio also factoring in a company's expected earnings growth rate. ABBNY currently has a PEG ratio of 2.26.
Another notable valuation metric for ENS is its P/B ratio of 2.05. 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, ABBNY has a P/B of 6.87.
Based on these metrics and many more, ENS holds a Value grade of A, while ABBNY has a Value grade of C.
ENS sticks out from ABBNY in both our Zacks Rank and Style Scores models, so value investors will likely feel that ENS is the better option right now.
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