Investors with an interest in Manufacturing - Electronics stocks have likely encountered both Vestas Wind Systems AS (VWDRY) and Powell Industries (POWL). But which of these two stocks presents investors with the better value opportunity right now? 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 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, Vestas Wind Systems AS is sporting a Zacks Rank of #2 (Buy), while Powell Industries has a Zacks Rank of #3 (Hold). The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that VWDRY has an improving earnings outlook. But this is just one piece of the puzzle 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.
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.
VWDRY currently has a forward P/E ratio of 20.94, while POWL has a forward P/E of 52.00. We also note that VWDRY has a PEG ratio of 1.40. 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. POWL currently has a PEG ratio of 3.71.
Another notable valuation metric for VWDRY is its P/B ratio of 6.16. 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, POWL has a P/B of 14.61.
Based on these metrics and many more, VWDRY holds a Value grade of B, while POWL has a Value grade of F.
VWDRY 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 VWDRY is likely the superior value option right now.
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Vestas Wind Systems AS (VWDRY): Free Stock Analysis Report
Powell Industries, Inc. (POWL): Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).