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

Zacks Equity Research
Updated
Wall Street finished in the green reversing its five-day negative trend on Thursday following news that United States and China have ramped up their efforts to resolve lingering trade disputes

Investors looking for stocks in the Security and Safety Services sector might want to consider either Johnson Controls (JCI) or Allegion (ALLE). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.

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.

Johnson Controls has a Zacks Rank of #2 (Buy), while Allegion 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 only part of the picture for value investors.

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.

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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.

JCI currently has a forward P/E ratio of 12.47, while ALLE has a forward P/E of 18.33. We also note that JCI has a PEG ratio of 1.13. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. ALLE currently has a PEG ratio of 1.43.

Another notable valuation metric for JCI is its P/B ratio of 1.48. The P/B ratio is used to compare a stock's market value with its book value, which is defined as total assets minus total liabilities. For comparison, ALLE has a P/B of 16.90.

These are just a few of the metrics contributing to JCI's Value grade of B and ALLE's Value grade of D.

JCI stands above ALLE thanks to its solid earnings outlook, and based on these valuation figures, we also feel that JCI is the superior value option right now.


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Johnson Controls International plc (JCI) : Free Stock Analysis Report
 
Allegion PLC (ALLE) : Free Stock Analysis Report
 
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