VWDRY or ETN: Which Is the Better Value Stock Right Now?

Investors interested in stocks from the Manufacturing - Electronics sector have probably already heard of Vestas Wind Systems AS (VWDRY) and Eaton (ETN). 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.

Everyone has their own methods for finding great value opportunities, but our model includes pairing an impressive grade in the Value category of our Style Scores system with a strong Zacks Rank. The proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.

Vestas Wind Systems AS and Eaton are sporting Zacks Ranks of #2 (Buy) and #3 (Hold), respectively, right now. Investors should feel comfortable knowing that VWDRY likely has seen a stronger improvement to its earnings outlook than ETN has recently. But this is just one factor that value investors are interested in.

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 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.

VWDRY currently has a forward P/E ratio of 20.32, while ETN has a forward P/E of 30.73. We also note that VWDRY has a PEG ratio of 0.80. 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. ETN currently has a PEG ratio of 2.63.

Another notable valuation metric for VWDRY is its P/B ratio of 7.24. 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, ETN has a P/B of 7.95.

These are just a few of the metrics contributing to VWDRY's Value grade of B and ETN's Value grade of F.

VWDRY has seen stronger estimate revision activity and sports more attractive valuation metrics than ETN, so it seems like value investors will conclude that VWDRY is the superior option right now.

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This article originally published on Zacks Investment Research (zacks.com).

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