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SSUMY or ITT: Which Is the Better Value Stock Right Now?

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Investors looking for stocks in the Diversified Operations sector might want to consider either Sumitomo Corp. (SSUMY - Free Report) or ITT (ITT - Free Report) . But which of these two stocks presents investors with the better value opportunity right now? Let's 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, Sumitomo Corp. has a Zacks Rank of #1 (Strong Buy), while ITT has a Zacks Rank of #2 (Buy). The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that SSUMY has an improving earnings outlook. However, value investors will care about much more than just this.

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.

Our Value category highlights undervalued companies by looking at a variety of key metrics, including the popular P/E ratio, as well as the P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that have been used by value investors for years.

SSUMY currently has a forward P/E ratio of 6.77, while ITT has a forward P/E of 25.27. We also note that SSUMY has a PEG ratio of 0.78. 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. ITT currently has a PEG ratio of 1.54.

Another notable valuation metric for SSUMY is its P/B ratio of 1.72. The P/B is a method of comparing a stock's market value to its book value, which is defined as total assets minus total liabilities. By comparison, ITT has a P/B of 4.02.

These are just a few of the metrics contributing to SSUMY's Value grade of A and ITT's Value grade of C.

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

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