SCSC or SIEGY: Which Is the Better Value Stock Right Now?

Investors with an interest in Industrial Services stocks have likely encountered both ScanSource (SCSC) and Siemens AG (SIEGY). But which of these two companies is the best option for those looking for undervalued stocks? Let's 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 favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.

ScanSource has a Zacks Rank of #2 (Buy), while Siemens AG has a Zacks Rank of #5 (Strong Sell) right now. This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that SCSC is likely seeing its earnings outlook improve to a greater extent. But this is just one piece of the puzzle for value investors.

Value investors also tend to look at a number of traditional, tried-and-true figures to help them find stocks that they believe are undervalued at their 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.

SCSC currently has a forward P/E ratio of 9.97, while SIEGY has a forward P/E of 20.71. We also note that SCSC has a PEG ratio of 0.66. 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. SIEGY currently has a PEG ratio of 2.95.

Another notable valuation metric for SCSC is its P/B ratio of 0.99. 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, SIEGY has a P/B of 2.81.

These metrics, and several others, help SCSC earn a Value grade of A, while SIEGY has been given a Value grade of D.

SCSC sticks out from SIEGY in both our Zacks Rank and Style Scores models, so value investors will likely feel that SCSC is the better option right now.

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

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