RBC Vs. ETN: Which Stock Should Value Investors Buy Now?

Investors looking for stocks in the Manufacturing - Electronics sector might want to consider either Regal Beloit (RBC) or Eaton (NYSE: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.

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.

Currently, Regal Beloit has a Zacks Rank of #2 (Buy), while Eaton has a Zacks Rank of #3 (Hold). Investors should feel comfortable knowing that RBC likely has seen a stronger improvement to its earnings outlook than ETN has recently. But this is just one piece of the puzzle 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 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.

RBC currently has a forward P/E ratio of 11.62, while ETN has a forward P/E of 14.87. We also note that RBC has a PEG ratio of 1.16. This figure is similar to the commonly-used P/E ratio, with the PEG ratio also factoring in a company's expected earnings growth rate. ETN currently has a PEG ratio of 1.59.

Another notable valuation metric for RBC is its P/B ratio of 1.16. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. For comparison, ETN has a P/B of 2.19.

Based on these metrics and many more, RBC holds a Value grade of A, while ETN has a Value grade of C.

RBC stands above ETN thanks to its solid earnings outlook, and based on these valuation figures, we also feel that RBC is the superior value option right now.