Investors interested in Electronics - Testing Equipment stocks are likely familiar with Itron (ITRI) and Ametek (AME). But which of these two companies is the best option for those looking for undervalued stocks? Let's take a closer look.

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 proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.

Currently, Itron has a Zacks Rank of #2 (Buy), while Ametek has a Zacks Rank of #3 (Hold). Investors should feel comfortable knowing that ITRI likely has seen a stronger improvement to its earnings outlook than AME has recently. But this is just one factor that value investors are interested in.

Value investors also try to analyze a wide range of traditional figures and metrics to help determine whether a company is undervalued at its current share price levels.

Our Value category grades stocks based on a number of key metrics, including the tried-and-true P/E ratio, the P/S ratio, earnings yield, and cash flow per share, as well as a variety of other fundamentals that value investors frequently use.

ITRI currently has a forward P/E ratio of 21, while AME has a forward P/E of 27.54. We also note that ITRI has a PEG ratio of 0.84. 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. AME currently has a PEG ratio of 3.06.

Another notable valuation metric for ITRI is its P/B ratio of 3.69. 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, AME has a P/B of 4.54.

These are just a few of the metrics contributing to ITRI's Value grade of B and AME's Value grade of D.

ITRI 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 ITRI is likely the superior value option right now.

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Itron, Inc. (ITRI) : Free Stock Analysis Report

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