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SSUMY vs. DHR: Which Stock Should Value Investors Buy Now?

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Investors with an interest in Diversified Operations stocks have likely encountered both Sumitomo Corp. (SSUMY - Free Report) and Danaher (DHR - Free Report) . But which of these two companies is the best option for those looking for undervalued stocks? Let's 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 Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.

Right now, Sumitomo Corp. is sporting a Zacks Rank of #2 (Buy), while Danaher has a Zacks Rank of #3 (Hold). This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that SSUMY is likely seeing its earnings outlook improve to a greater extent. However, value investors will care about much more than just this.

Value investors also tend to look at a number of traditional, tried-and-true figures to help them find stocks that they believe are undervalued at their 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.

SSUMY currently has a forward P/E ratio of 8.47, while DHR has a forward P/E of 31.04. We also note that SSUMY has a PEG ratio of 0.57. 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. DHR currently has a PEG ratio of 2.27.

Another notable valuation metric for SSUMY is its P/B ratio of 0.72. 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, DHR has a P/B of 4.52.

Based on these metrics and many more, SSUMY holds a Value grade of A, while DHR has a Value grade of D.

SSUMY 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 SSUMY is likely the superior value option right now.


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