Investors interested in Security and Safety Services stocks are likely familiar with Johnson Controls (JCI) and Brady (BRC). But which of these two stocks presents investors with the better value opportunity right now? Let's 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.
Right now, Johnson Controls is sporting a Zacks Rank of #2 (Buy), while Brady 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 JCI is likely seeing its earnings outlook improve to a greater extent. But this is just one factor that value investors are interested in.
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 grades stocks based on a number of key metrics, including the tried-and-true P/E ratio, the P/S ratio, earnings yield, and cash flow per share, as well as a variety of other fundamentals that value investors frequently use.
JCI currently has a forward P/E ratio of 15.93, while BRC has a forward P/E of 21.39. We also note that JCI has a PEG ratio of 1.65. This popular figure is similar to the widely-used P/E ratio, but the PEG ratio also considers a company's expected EPS growth rate. BRC currently has a PEG ratio of 2.85.
Another notable valuation metric for JCI is its P/B ratio of 1.55. 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, BRC has a P/B of 3.45.
Based on these metrics and many more, JCI holds a Value grade of B, while BRC has a Value grade of D.
JCI stands above BRC 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
Brady Corporation (BRC) : Free Stock Analysis Report
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