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GFSZY vs. ALLE: Which Stock Should Value Investors Buy Now?

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Investors interested in stocks from the Security and Safety Services sector have probably already heard of G4S PLC (GFSZY - Free Report) and Allegion (ALLE - 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 Zacks Rank is a proven strategy that targets companies with positive earnings estimate revision trends, while our Style Scores work to grade companies based on specific traits.

G4S PLC has a Zacks Rank of #2 (Buy), while Allegion has a Zacks Rank of #3 (Hold) right now. Investors should feel comfortable knowing that GFSZY likely has seen a stronger improvement to its earnings outlook than ALLE has recently. However, value investors will care about much more than just this.

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.

GFSZY currently has a forward P/E ratio of 11.09, while ALLE has a forward P/E of 23.46. We also note that GFSZY has a PEG ratio of 1.85. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. ALLE currently has a PEG ratio of 1.99.

Another notable valuation metric for GFSZY is its P/B ratio of 4.18. 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, ALLE has a P/B of 16.95.

These metrics, and several others, help GFSZY earn a Value grade of A, while ALLE has been given a Value grade of D.

GFSZY stands above ALLE thanks to its solid earnings outlook, and based on these valuation figures, we also feel that GFSZY is the superior value option right now.


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