KUBTY or DE: Which Is the Better Value Stock Right Now?
Investors interested in Manufacturing - Farm Equipment stocks are likely familiar with Kubota Corp. (KUBTY) and Deere (DE). But which of these two stocks presents investors with the better value opportunity right now? 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 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.
Right now, Kubota Corp. is sporting a Zacks Rank of #2 (Buy), while Deere has a Zacks Rank of #3 (Hold). The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that KUBTY has an improving earnings 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.
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.
KUBTY currently has a forward P/E ratio of 11.30, while DE has a forward P/E of 37.91. We also note that KUBTY has a PEG ratio of 1.13. 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. DE currently has a PEG ratio of 2.51.
Another notable valuation metric for KUBTY is its P/B ratio of 1.03. 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, DE has a P/B of 6.62.
These are just a few of the metrics contributing to KUBTY's Value grade of A and DE's Value grade of D.
KUBTY has seen stronger estimate revision activity and sports more attractive valuation metrics than DE, so it seems like value investors will conclude that KUBTY is the superior option right now.
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Deere & Company (DE) : Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).
