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

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Investors interested in Manufacturing - Electronics stocks are likely familiar with Regal Beloit (RBC - Free Report) and Rexnord (RXN - 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 proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.

Regal Beloit has a Zacks Rank of #2 (Buy), while Rexnord has a Zacks Rank of #3 (Hold) right now. This means that RBC'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.

RBC currently has a forward P/E ratio of 16.64, while RXN has a forward P/E of 24.72. We also note that RBC has a PEG ratio of 1.66. 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. RXN currently has a PEG ratio of 1.99.

Another notable valuation metric for RBC is its P/B ratio of 2. 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, RXN has a P/B of 3.93.

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

RBC has seen stronger estimate revision activity and sports more attractive valuation metrics than RXN, so it seems like value investors will conclude that RBC is the superior option right now.


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Regal Beloit Corporation (RBC) - free report >>

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