Investors interested in Security and Safety Services stocks are likely familiar with Johnson Controls (JCI - Free Report) and Axon Enterprise (AAXN - Free Report) . But which of these two stocks presents investors with the better value opportunity right now? Let's take a closer look.
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, Johnson Controls has a Zacks Rank of #2 (Buy), while Axon Enterprise has a Zacks Rank of #4 (Sell). This means that JCI's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. 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 highlights undervalued companies by looking at a variety of key metrics, including the popular P/E ratio, as well as the P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that have been used by value investors for years.
JCI currently has a forward P/E ratio of 21.87, while AAXN has a forward P/E of 62.69. We also note that JCI has a PEG ratio of 2.26. 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. AAXN currently has a PEG ratio of 4.18.
Another notable valuation metric for JCI is its P/B ratio of 1.58. 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. By comparison, AAXN has a P/B of 7.27.
Based on these metrics and many more, JCI holds a Value grade of B, while AAXN has a Value grade of F.
JCI stands above AAXN thanks to its solid earnings outlook, and based on these valuation figures, we also feel that JCI is the superior value option right now.