Investors interested in stocks from the Security and Safety Services sector have probably already heard of Resideo Technologies (REZI) and Johnson Controls (NYSE:JCI). 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.
The best way to find great value stocks is to pair a strong Zacks Rank with an impressive 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.
Resideo Technologies and Johnson Controls are sporting Zacks Ranks of #2 (Buy) and #3 (Hold), respectively, right now. The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that REZI has an improving earnings outlook. But this is just one piece of the puzzle for value investors.
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 Style Score Value grade factors in a variety of key fundamental metrics, including the popular P/E ratio, P/S ratio, earnings yield, cash flow per share, and a number of other key stats that are commonly used by value investors.
REZI currently has a forward P/E ratio of 3.99, while JCI has a forward P/E of 10.55. We also note that REZI has a PEG ratio of 0.17. 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. JCI currently has a PEG ratio of 1.11.
Another notable valuation metric for REZI is its P/B ratio of 0.39. 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, JCI has a P/B of 0.98.
These are just a few of the metrics contributing to REZI's Value grade of A and JCI's Value grade of C.
REZI 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 REZI is likely the superior value option right now.
Resideo Technologies, Inc. (REZI): Free Stock Analysis Report
Johnson Controls International plc (JCI): Free Stock Analysis Report
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