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HTHIY vs. DHR: Which Stock Is the Better Value Option?
Investors with an interest in Diversified Operations stocks have likely encountered both Hitachi Ltd. (HTHIY - Free Report) and Danaher (DHR - Free Report) . But which of these two stocks presents investors with the better value opportunity right now? Let's take a closer look.
The best way to find great value stocks is to pair a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system. The Zacks Rank is a proven strategy that targets companies with positive earnings estimate revision trends, while our Style Scores work to grade companies based on specific traits.
Currently, Hitachi Ltd. has a Zacks Rank of #1 (Strong Buy), while Danaher has a Zacks Rank of #4 (Sell). Investors should feel comfortable knowing that HTHIY likely has seen a stronger improvement to its earnings outlook than DHR has recently. 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.
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.
HTHIY currently has a forward P/E ratio of 11.36, while DHR has a forward P/E of 26.47. We also note that HTHIY has a PEG ratio of 1.90. 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. DHR currently has a PEG ratio of 2.21.
Another notable valuation metric for HTHIY is its P/B ratio of 1.33. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. For comparison, DHR has a P/B of 4.41.
These metrics, and several others, help HTHIY earn a Value grade of B, while DHR has been given a Value grade of F.
HTHIY has seen stronger estimate revision activity and sports more attractive valuation metrics than DHR, so it seems like value investors will conclude that HTHIY is the superior option right now.