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CR vs. DHR: Which Stock Should Value Investors Buy Now?

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Investors looking for stocks in the Diversified Operations sector might want to consider either Crane (CR - Free Report) or Danaher (DHR - Free Report) . But which of these two stocks offers value investors a better bang for their buck right now? We'll need to 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 proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.

Both Crane and Danaher have a Zacks Rank of # 2 (Buy) right now. This means that both companies have witnessed positive earnings estimate revisions, so investors should feel comfortable knowing that both of these stocks have 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.

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.

CR currently has a forward P/E ratio of 13.33, while DHR has a forward P/E of 29.68. We also note that CR has a PEG ratio of 2.13. 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. DHR currently has a PEG ratio of 2.56.

Another notable valuation metric for CR is its P/B ratio of 3.21. 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, DHR has a P/B of 3.38.

These metrics, and several others, help CR earn a Value grade of B, while DHR has been given a Value grade of C.

Both CR and DHR are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that CR is the superior value option right now.


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