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RRX or ETN: Which Is the Better Value Stock Right Now?

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Investors interested in Manufacturing - Electronics stocks are likely familiar with Regal Beloit (RRX - Free Report) and Eaton (ETN - Free Report) . But which of these two companies is the best option for those looking for undervalued stocks? Let's take a closer look.

Everyone has their own methods for finding great value opportunities, but our model includes pairing an impressive grade in the Value category of our Style Scores system with a strong Zacks Rank. The Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.

Right now, Regal Beloit is sporting a Zacks Rank of #2 (Buy), while Eaton 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 RRX has an improving earnings outlook. But this is only part of the picture 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 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.

RRX currently has a forward P/E ratio of 11.94, while ETN has a forward P/E of 19.08. We also note that RRX has a PEG ratio of 1.19. 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. ETN currently has a PEG ratio of 1.73.

Another notable valuation metric for RRX is its P/B ratio of 1.32. 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, ETN has a P/B of 3.43.

These are just a few of the metrics contributing to RRX's Value grade of B and ETN's Value grade of C.

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


In-Depth Zacks Research for the Tickers Above


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Eaton Corporation, PLC (ETN) - free report >>

Regal Rexnord Corporation (RRX) - free report >>

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