Back to top

Image: Bigstock

ENS vs. AOS: Which Stock Is the Better Value Option?

Read MoreHide Full Article

Investors with an interest in Manufacturing - Electronics stocks have likely encountered both EnerSys (ENS - Free Report) and A.O. Smith (AOS - Free Report) . But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.

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 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 A.O. Smith 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 ENS has an improving earnings outlook. 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.

ENS currently has a forward P/E ratio of 18.57, while AOS has a forward P/E of 27.55. We also note that ENS has a PEG ratio of 1.86. 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. AOS currently has a PEG ratio of 3.44.

Another notable valuation metric for ENS is its P/B ratio of 2.38. 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, AOS has a P/B of 4.84.

These metrics, and several others, help ENS earn a Value grade of B, while AOS has been given a Value grade of C.

ENS sticks out from AOS in both our Zacks Rank and Style Scores models, so value investors will likely feel that ENS is the better option right now.


See More Zacks Research for These Tickers


Normally $25 each - click below to receive one report FREE:


A. O. Smith Corporation (AOS) - free report >>

Enersys (ENS) - free report >>

Published in