Back to top

Image: Bigstock

VWDRY vs. ABBNY: Which Stock Is the Better Value Option?

Read MoreHide Full Article

Investors interested in Manufacturing - Electronics stocks are likely familiar with Vestas Wind Systems AS (VWDRY - Free Report) and ABB (ABBNY - 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.

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 favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.

Currently, Vestas Wind Systems AS has a Zacks Rank of #2 (Buy), while ABB has a Zacks Rank of #4 (Sell). Investors should feel comfortable knowing that VWDRY likely has seen a stronger improvement to its earnings outlook than ABBNY has recently. However, value investors will care about much more than just this.

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.

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.

VWDRY currently has a forward P/E ratio of 22.95, while ABBNY has a forward P/E of 24.82. We also note that VWDRY has a PEG ratio of 0.56. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. ABBNY currently has a PEG ratio of 2.00.

Another notable valuation metric for VWDRY is its P/B ratio of 7.01. 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, ABBNY has a P/B of 9.08.

Based on these metrics and many more, VWDRY holds a Value grade of B, while ABBNY has a Value grade of D.

VWDRY stands above ABBNY thanks to its solid earnings outlook, and based on these valuation figures, we also feel that VWDRY is the superior value option right now.

Published in