Investors looking for stocks in the Security and Safety Services sector might want to consider either Johnson Controls (JCI - Free Report) or Brady (BRC - Free Report) . But which of these two stocks presents investors with the better value opportunity right now? Let's take a closer look.
Everyone has their own methods for finding great value opportunities, but our model includes pairing an impressive grade in the Value category of our Style Scores system with a strong Zacks Rank. 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.
Johnson Controls has a Zacks Rank of #2 (Buy), while Brady has a Zacks Rank of #3 (Hold) right now. 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 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.
JCI currently has a forward P/E ratio of 16.12, while BRC has a forward P/E of 21.40. We also note that JCI has a PEG ratio of 1.67. 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. BRC currently has a PEG ratio of 2.85.
Another notable valuation metric for JCI is its P/B ratio of 1.57. 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, BRC has a P/B of 3.45.
These metrics, and several others, help JCI earn a Value grade of B, while BRC has been given a Value grade of C.
JCI is currently sporting an improving earnings outlook, which makes it stick out in our Zacks Rank model. And, based on the above valuation metrics, we feel that JCI is likely the superior value option right now.