Back to top

ETN vs. ENS: Which Stock Is the Better Value Option?

Read MoreHide Full Article

Investors interested in Manufacturing - Electronics stocks are likely familiar with Eaton (ETN - Free Report) and EnerSys (ENS - 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 favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.

Right now, Eaton is sporting a Zacks Rank of #2 (Buy), while EnerSys has a Zacks Rank of #5 (Strong Sell). This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that ETN is likely seeing its earnings outlook improve to a greater extent. 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.

ETN currently has a forward P/E ratio of 16.32, while ENS has a forward P/E of 17.12. We also note that ETN has a PEG ratio of 1.59. 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. ENS currently has a PEG ratio of 1.71.

Another notable valuation metric for ETN is its P/B ratio of 2.27. The P/B ratio is used to compare a stock's market value with its book value, which is defined as total assets minus total liabilities. For comparison, ENS has a P/B of 3.10.

These metrics, and several others, help ETN earn a Value grade of A, while ENS has been given a Value grade of C.

ETN has seen stronger estimate revision activity and sports more attractive valuation metrics than ENS, so it seems like value investors will conclude that ETN is the superior option 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 >>

Enersys (ENS) - free report >>

More from Zacks Tale of the Tape

You May Like