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SSUMY vs. DHR: Which Stock Is the Better Value Option?

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Investors looking for stocks in the Diversified Operations sector might want to consider either Sumitomo Corp. (SSUMY - Free Report) or Danaher (DHR - Free Report) . But which of these two stocks offers value investors a better bang for their buck right now? We'll need to 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.

Sumitomo Corp. and Danaher are sporting Zacks Ranks of #1 (Strong Buy) and #3 (Hold), respectively, right now. This means that SSUMY'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.

The Value category of the Style Scores system identifies undervalued companies by looking at a number of key metrics. These include the long-favored P/E ratio, P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that help us determine a company's fair value.

SSUMY currently has a forward P/E ratio of 4.98, while DHR has a forward P/E of 28.79. We also note that SSUMY has a PEG ratio of 0.15. This figure is similar to the commonly-used P/E ratio, with the PEG ratio also factoring in a company's expected earnings growth rate. DHR currently has a PEG ratio of 1.40.

Another notable valuation metric for SSUMY is its P/B ratio of 0.77. 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, DHR has a P/B of 5.11.

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

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


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