MITSY vs. HON: Which Stock Is the Better Value Option?

Investors interested in stocks from the Diversified Operations sector have probably already heard of Mitsui & Co. (MITSY) and Honeywell International Inc. (HON). 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.

Mitsui & Co. has a Zacks Rank of #2 (Buy), while Honeywell International Inc. has a Zacks Rank of #5 (Strong Sell) right now. The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that MITSY has an improving earnings 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.

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.

MITSY currently has a forward P/E ratio of 13.91, while HON has a forward P/E of 25.06. We also note that MITSY has a PEG ratio of 1.21. 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. HON currently has a PEG ratio of 3.48.

Another notable valuation metric for MITSY is its P/B ratio of 1.61. 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, HON has a P/B of 3.49.

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

MITSY 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 MITSY is likely the superior value option right now.

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

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