Investors interested in stocks from the Diversified Operations sector have probably already heard of Grupo Cibest (CIB) and ITT (ITT). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.
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 proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
Right now, Grupo Cibest is sporting a Zacks Rank of #1 (Strong Buy), while ITT has a Zacks Rank of #4 (Sell). This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that CIB is likely seeing its earnings outlook improve to a greater extent. But this is only part of the picture for value investors.
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 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.
CIB currently has a forward P/E ratio of 9.07, while ITT has a forward P/E of 24.34. We also note that CIB has a PEG ratio of 0.92. 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. ITT currently has a PEG ratio of 1.81.
Another notable valuation metric for CIB is its P/B ratio of 1.69. 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, ITT has a P/B of 3.63.
These metrics, and several others, help CIB earn a Value grade of A, while ITT has been given a Value grade of D.
CIB stands above ITT thanks to its solid earnings outlook, and based on these valuation figures, we also feel that CIB is the superior value option right now.
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This article originally published on Zacks Investment Research (zacks.com).
