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BRC vs. ALLE: Which Stock Is the Better Value Option?
Investors interested in Security and Safety Services stocks are likely familiar with Brady (BRC - Free Report) and Allegion (ALLE - 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 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, Brady has a Zacks Rank of #2 (Buy), while Allegion has a Zacks Rank of #3 (Hold). Investors should feel comfortable knowing that BRC likely has seen a stronger improvement to its earnings outlook than ALLE has recently. But this is only part of the picture for value investors.
Value investors are also interested in a number of tried-and-true valuation metrics that help show when a company is undervalued at its 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 15.25, while ALLE has a forward P/E of 16.09. We also note that BRC has a PEG ratio of 2.18. 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. ALLE currently has a PEG ratio of 2.49.
Another notable valuation metric for BRC is its P/B ratio of 2.70. 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 9.52.
Based on these metrics and many more, BRC holds a Value grade of B, while ALLE has 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.