Investors with an interest in Manufacturing - Electronics stocks have likely encountered both Powell Industries (POWL) and ABB (ABBNY). But which of these two stocks offers value investors a better bang for their buck right now? We'll need to 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 proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.
Powell Industries has a Zacks Rank of #2 (Buy), while ABB has a Zacks Rank of #3 (Hold) right now. This means that POWL's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. But this is just one piece of the puzzle for value investors.
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 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.
POWL currently has a forward P/E ratio of 17.62, while ABBNY has a forward P/E of 26.77. We also note that POWL has a PEG ratio of 1.26. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. ABBNY currently has a PEG ratio of 2.71.
Another notable valuation metric for POWL is its P/B ratio of 5.99. 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, ABBNY has a P/B of 7.33.
Based on these metrics and many more, POWL holds a Value grade of B, while ABBNY has a Value grade of D.
POWL stands above ABBNY thanks to its solid earnings outlook, and based on these valuation figures, we also feel that POWL is the superior value option right now.
Free Today: Profiting from The Future’s Brightest Energy Source
The demand for electricity is growing exponentially. At the same time, we’re working to reduce our dependence on fossil fuels like oil and natural gas. Nuclear energy is an ideal replacement.
Leaders from the US and 21 other countries recently committed to TRIPLING the world’s nuclear energy capacities. This aggressive transition could mean tremendous profits for nuclear-related stocks – and investors who get in on the action early enough.
Our urgent report, Atomic Opportunity: Nuclear Energy's Comeback, explores the key players and technologies driving this opportunity, including 3 standout stocks poised to benefit the most.
Powell Industries, Inc. (POWL) : Free Stock Analysis Report
ABB Ltd (ABBNY) : Free Stock Analysis Report
To read this article on Zacks.com click here.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
