ITT vs. DHR: Which Stock Should Value Investors Buy Now?

Investors interested in stocks from the Diversified Operations sector have probably already heard of ITT (ITT) and Danaher (DHR). 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.

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.

Currently, ITT has a Zacks Rank of #2 (Buy), while Danaher has a Zacks Rank of #3 (Hold). Investors should feel comfortable knowing that ITT likely has seen a stronger improvement to its earnings outlook than DHR has recently. But this is just one piece of the puzzle for value investors.

Value investors also try to analyze a wide range of traditional figures and metrics to help determine whether a company is undervalued at its 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.

ITT currently has a forward P/E ratio of 18.45, while DHR has a forward P/E of 28.29. We also note that ITT has a PEG ratio of 1.85. 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. DHR currently has a PEG ratio of 2.26.

Another notable valuation metric for ITT is its P/B ratio of 3.01. 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, DHR has a P/B of 3.06.

These metrics, and several others, help ITT earn a Value grade of B, while DHR has been given a Value grade of D.

ITT 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 ITT is likely the superior value option right now.

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ITT Inc. (ITT) : Free Stock Analysis Report
 
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