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MARUY vs. HON: Which Stock Should Value Investors Buy Now?

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Investors looking for stocks in the Diversified Operations sector might want to consider either Marubeni Corp. (MARUY - Free Report) or Honeywell International Inc. (HON - Free Report) . But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.

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 proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.

Marubeni Corp. has a Zacks Rank of #1 (Strong Buy), while Honeywell International Inc. has a Zacks Rank of #4 (Sell) right now. This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that MARUY is likely seeing its earnings outlook improve to a greater extent. But this is just one piece of the puzzle for value investors.

Value investors also tend to look at a number of traditional, tried-and-true figures to help them find stocks that they believe are undervalued at their 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.

MARUY currently has a forward P/E ratio of 4.03, while HON has a forward P/E of 19.83. We also note that MARUY has a PEG ratio of 0.16. 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. HON currently has a PEG ratio of 2.06.

Another notable valuation metric for MARUY is its P/B ratio of 0.75. 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, HON has a P/B of 6.15.

Based on these metrics and many more, MARUY holds a Value grade of A, while HON has a Value grade of C.

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


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