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ST vs. WTS: Which Stock Should Value Investors Buy Now?

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Investors interested in Instruments - Control stocks are likely familiar with Sensata (ST - Free Report) and Watts Water (WTS - Free Report) . But which of these two stocks presents investors with the better value opportunity right now? Let's take a closer look.

We have found that the best way to discover great value opportunities is to pair a strong Zacks Rank with a great grade in the Value category of our Style Scores system. The proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.

Currently, both Sensata and Watts Water are holding a Zacks Rank of # 2 (Buy). The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that both of these companies have improving earnings outlooks. 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.

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.

ST currently has a forward P/E ratio of 16.46, while WTS has a forward P/E of 30.60. We also note that ST has a PEG ratio of 1.49. 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. WTS currently has a PEG ratio of 3.83.

Another notable valuation metric for ST is its P/B ratio of 3.21. The P/B ratio is used to compare a stock's market value with its book value, which is defined as total assets minus total liabilities. For comparison, WTS has a P/B of 4.53.

Based on these metrics and many more, ST holds a Value grade of B, while WTS has a Value grade of D.

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


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Sensata Technologies Holding N.V. (ST) - free report >>

Watts Water Technologies, Inc. (WTS) - free report >>

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