Back to top

Are Investors Undervaluing Eaton (ETN) Right Now?

Read MoreHide Full Article

While the proven Zacks Rank places an emphasis on earnings estimates and estimate revisions to find strong stocks, we also know that investors tend to develop their own individual strategies. With this in mind, we are always looking at value, growth, and momentum trends to discover great companies.

Looking at the history of these trends, perhaps none is more beloved than value investing. This strategy simply looks to identify companies that are being undervalued by the broader market. Value investors use fundamental analysis and traditional valuation metrics to find stocks that they believe are being undervalued by the market at large.

Zacks has developed the innovative Style Scores system to highlight stocks with specific traits. For example, value investors will be interested in stocks with great grades in the "Value" category. When paired with a high Zacks Rank, "A" grades in the Value category are among the strongest value stocks on the market today.

One stock to keep an eye on is Eaton (ETN - Free Report) . ETN is currently holding a Zacks Rank of #2 (Buy) and a Value grade of A. The stock holds a P/E ratio of 15.02, while its industry has an average P/E of 17.13. Over the past 52 weeks, ETN's Forward P/E has been as high as 17.82 and as low as 13.65, with a median of 15.05.

ETN is also sporting a PEG ratio of 1.47. This figure is similar to the commonly-used P/E ratio, with the PEG ratio also factoring in a company's expected earnings growth rate. ETN's PEG compares to its industry's average PEG of 1.73. Over the last 12 months, ETN's PEG has been as high as 2.11 and as low as 1.36, with a median of 1.70.

We should also highlight that ETN has a P/B ratio of 2.25. 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. This stock's P/B looks attractive against its industry's average P/B of 4.88. Within the past 52 weeks, ETN's P/B has been as high as 2.29 and as low as 1.84, with a median of 2.07.

Finally, investors will want to recognize that ETN has a P/CF ratio of 9.36. This metric focuses on a firm's operating cash flow and is often used to find stocks that are undervalued based on the strength of their cash outlook. ETN's current P/CF looks attractive when compared to its industry's average P/CF of 19.64. Over the past 52 weeks, ETN's P/CF has been as high as 11.99 and as low as 8.09, with a median of 9.05.

These are just a handful of the figures considered in Eaton's great Value grade. Still, they help show that the stock is likely being undervalued at the moment. Add this to the strength of its earnings outlook, and we can clearly see that ETN is an impressive value stock right now.




In-Depth Zacks Research for the Tickers Above


Normally $25 each - click below to receive one report FREE:


Eaton Corporation, PLC (ETN) - free report >>

More from Zacks Tale of the Tape

You May Like