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BRC vs. ALLE: Which Stock Is the Better Value Option?

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Investors looking for stocks in the Security and Safety Services sector might want to consider either Brady (BRC - Free Report) or Allegion (ALLE - Free Report) . But which of these two companies is the best option for those looking for undervalued stocks? 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 puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.

Currently, Brady has a Zacks Rank of #2 (Buy), while Allegion 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 BRC has an improving earnings outlook. But this is just one piece of the puzzle for value investors.

Value investors analyze a variety of traditional, tried-and-true metrics to help find companies 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.

BRC currently has a forward P/E ratio of 15.81, while ALLE has a forward P/E of 24.50. We also note that BRC has a PEG ratio of 2.26. 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. ALLE currently has a PEG ratio of 3.53.

Another notable valuation metric for BRC is its P/B ratio of 2.74. Investors use the P/B ratio to look at a stock's market value versus its book value, which is defined as total assets minus total liabilities. By comparison, ALLE has a P/B of 15.09.

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

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


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