Back to top

Image: Bigstock

RBC vs. ETN: Which Stock Should Value Investors Buy Now?

Read MoreHide Full Article

Investors with an interest in Manufacturing - Electronics stocks have likely encountered both Regal Beloit (RBC - Free Report) and Eaton (ETN - Free Report) . But which of these two stocks presents investors with the better value opportunity right now? Let's take a closer look.

The best way to find great value stocks is to pair a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system. 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, both Regal Beloit and Eaton are sporting a Zacks Rank of # 2 (Buy). This means that both companies have witnessed positive earnings estimate revisions, so investors should feel comfortable knowing that both of these stocks have an improving earnings outlook. But this is just one factor that value investors are interested in.

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.

RBC currently has a forward P/E ratio of 19.43, while ETN has a forward P/E of 24.03. We also note that RBC has a PEG ratio of 1.94. This popular figure is similar to the widely-used P/E ratio, but the PEG ratio also considers a company's expected EPS growth rate. ETN currently has a PEG ratio of 2.18.

Another notable valuation metric for RBC is its P/B ratio of 2.19. 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, ETN has a P/B of 3.63.

Based on these metrics and many more, RBC holds a Value grade of B, while ETN has a Value grade of C.

Both RBC and ETN are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that RBC is the superior value option right now.


In-Depth Zacks Research for the Tickers Above


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


Regal Beloit Corporation (RBC) - free report >>

Eaton Corporation, PLC (ETN) - free report >>

Published in