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Investors interested in stocks from the Diversified Operations sector have probably already heard of Swire Pacific (SWRAY) and ITT (ITT). 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.
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 favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.
Currently, Swire Pacific has a Zacks Rank of #1 (Strong Buy), while ITT has a Zacks Rank of #3 (Hold). The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that SWRAY has an improving earnings outlook. 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.
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.
SWRAY currently has a forward P/E ratio of 8.97, while ITT has a forward P/E of 25.89. We also note that SWRAY has a PEG ratio of 0.55. 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. ITT currently has a PEG ratio of 2.
Another notable valuation metric for SWRAY is its P/B ratio of 0.73. 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, ITT has a P/B of 4.81.
Based on these metrics and many more, SWRAY holds a Value grade of A, while ITT has a Value grade of D.
SWRAY sticks out from ITT in both our Zacks Rank and Style Scores models, so value investors will likely feel that SWRAY is the better option right now.
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Swire Pacific Ltd. (SWRAY) : Free Stock Analysis Report
ITT Inc. (ITT) : Free Stock Analysis Report