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ITT vs. DHR: Which Stock Is the Better Value Option?

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Investors looking for stocks in the Diversified Operations sector might want to consider either ITT (ITT - Free Report) or Danaher (DHR - 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.

We have found that the best way to discover great value opportunities is to pair a strong Zacks Rank with a great grade in the Value category of our Style Scores system. The proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.

Currently, ITT has a Zacks Rank of #2 (Buy), while Danaher has a Zacks Rank of #3 (Hold). This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that ITT is likely seeing its earnings outlook improve to a greater extent. But this is just one factor that value investors are interested in.

Value investors analyze a variety of traditional, tried-and-true metrics to help find companies that they believe are undervalued at their 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.

ITT currently has a forward P/E ratio of 16.71, while DHR has a forward P/E of 23.58. We also note that ITT has a PEG ratio of 1.36. 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. DHR currently has a PEG ratio of 2.05.

Another notable valuation metric for ITT is its P/B ratio of 2.58. 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, DHR has a P/B of 2.69.

These are just a few of the metrics contributing to ITT's Value grade of B and DHR's Value grade of D.

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




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