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ENS vs. ABB: Which Stock Should Value Investors Buy Now?

Zacks Equity Research
Updated
Cohen & Steers (CNS) reported earnings 30 days ago. What's next for the stock? We take a look at earnings estimates for some clues.

Investors interested in stocks from the Manufacturing - Electronics sector have probably already heard of EnerSys (ENS) and ABB (ABB). But which of these two stocks presents investors with the better value opportunity right now? Let's 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 proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.

Currently, EnerSys has a Zacks Rank of #2 (Buy), while ABB has a Zacks Rank of #3 (Hold). This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that ENS is likely seeing its earnings outlook improve. But this is only part of the picture 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.

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The Value category of the Style Scores system identifies undervalued companies by looking at a number of key metrics. These include the long-favored P/E ratio, P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that help us determine a company's fair value.

ENS currently has a forward P/E ratio of 14.98, while ABB has a forward P/E of 16.36. We also note that ENS has a PEG ratio of 1.50. 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. ABB currently has a PEG ratio of 2.39.

Another notable valuation metric for ENS is its P/B ratio of 2.79. 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, ABB has a P/B of 3.49.

These metrics, and several others, help ENS earn a Value grade of A, while ABB has been given a Value grade of C.

ENS 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 ENS is likely the superior value option right now.


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Enersys (ENS) : Free Stock Analysis Report
 
ABB Ltd (ABB) : Free Stock Analysis Report
 
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