Back to top

Image: Bigstock

REZI vs. ALLE: Which Stock Is the Better Value Option?

Read MoreHide Full Article

Investors looking for stocks in the Security and Safety Services sector might want to consider either Resideo Technologies (REZI - Free Report) or Allegion (ALLE - Free Report) . But which of these two companies is the best option for those looking for undervalued stocks? Let's take a closer look.

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 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.

Right now, Resideo Technologies is sporting a Zacks Rank of #2 (Buy), while Allegion has a Zacks Rank of #4 (Sell). This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that REZI is likely seeing its earnings outlook improve to a greater extent. However, value investors will care about much more than just this.

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.

REZI currently has a forward P/E ratio of 3.58, while ALLE has a forward P/E of 22.32. We also note that REZI has a PEG ratio of 0.23. This figure is similar to the commonly-used P/E ratio, with the PEG ratio also factoring in a company's expected earnings growth rate. ALLE currently has a PEG ratio of 3.66.

Another notable valuation metric for REZI is its P/B ratio of 0.35. 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, ALLE has a P/B of 14.51.

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

REZI has seen stronger estimate revision activity and sports more attractive valuation metrics than ALLE, so it seems like value investors will conclude that REZI is the superior option right now.


In-Depth Zacks Research for the Tickers Above


Normally $25 each - click below to receive one report FREE:


Resideo Technologies, Inc. (REZI) - free report >>

Allegion PLC (ALLE) - free report >>

Published in