Investors with an interest in Diversified Operations stocks have likely encountered both Carlisle (CSL - Free Report) and 3M (MMM - 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 proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
Currently, Carlisle has a Zacks Rank of #2 (Buy), while 3M has a Zacks Rank of #3 (Hold). The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that CSL has an improving earnings outlook. But this is only part of the picture for value investors.
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 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.
CSL currently has a forward P/E ratio of 14.29, while MMM has a forward P/E of 17.02. We also note that CSL has a PEG ratio of 0.95. 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. MMM currently has a PEG ratio of 1.67.
Another notable valuation metric for CSL is its P/B ratio of 2.18. 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, MMM has a P/B of 10.38.
Based on these metrics and many more, CSL holds a Value grade of B, while MMM has a Value grade of D.
CSL stands above MMM thanks to its solid earnings outlook, and based on these valuation figures, we also feel that CSL is the superior value option right now.