Investors with an interest in Security and Safety Services stocks have likely encountered both Brady (BRC) and Allegion (ALLE). 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.
There are plenty of strategies for discovering value stocks, but we have found that pairing a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system produces the best returns. The Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.
Right now, Brady is sporting a Zacks Rank of #2 (Buy), while Allegion has a Zacks Rank of #4 (Sell). Investors should feel comfortable knowing that BRC likely has seen a stronger improvement to its earnings outlook than ALLE has recently. But this is just one piece of the puzzle for value investors.
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 Style Score Value grade factors in a variety of key fundamental metrics, including the popular P/E ratio, P/S ratio, earnings yield, cash flow per share, and a number of other key stats that are commonly used by value investors.
BRC currently has a forward P/E ratio of 13.61, while ALLE has a forward P/E of 18.37. We also note that BRC has a PEG ratio of 1.94. 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 2.28.
Another notable valuation metric for BRC is its P/B ratio of 2.58. 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 11.17.
Based on these metrics and many more, BRC holds a Value grade of B, while ALLE has a Value grade of C.
BRC has seen stronger estimate revision activity and sports more attractive valuation metrics than ALLE, so it seems like value investors will conclude that BRC is the superior option right now.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Brady Corporation (BRC) : Free Stock Analysis Report
Allegion PLC (ALLE) : Free Stock Analysis Report
To read this article on Zacks.com click here.
Zacks Investment Research