BRC or ALLE: Which Is the Better Value Stock Right Now?
Investors looking for stocks in the Security and Safety Services sector might want to consider either Brady BRC or Allegion. But which of these two stocks is more attractive to value investors? We’ll need to take a closer look to find out.
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.
Brady and Allegion are both sporting a Zacks Rank of # 2 (Buy) right now. This means that both companies have witnessed positive earnings estimate revisions, so investors should feel comfortable knowing that both of these stocks have an improving earnings outlook. However, value investors will care about much more than just this.
Value investors are also interested in a number of tried-and-true valuation metrics that help show when 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.
BRC currently has a forward P/E ratio of 15.97, while ALLE has a forward P/E of 18.53. We also note that BRC has a PEG ratio of 2.07. 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. ALLE currently has a PEG ratio of 4.13.
Another notable valuation metric for BRC is its P/B ratio of 3.23. 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, ALLE has a P/B of 8.23.
These metrics, and several others, help BRC earn a Value grade of B, while ALLE has been given a Value grade of C.
Both BRC and ALLE are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that BRC is the superior value option right now.
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