SSUMY vs. CSL: Which Stock Is the Better Value Option?

Investors looking for stocks in the Diversified Operations sector might want to consider either Sumitomo Corp. (SSUMY) or Carlisle (CSL). 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 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.

Sumitomo Corp. has a Zacks Rank of #1 (Strong Buy), while Carlisle has a Zacks Rank of #3 (Hold) right now. Investors should feel comfortable knowing that SSUMY likely has seen a stronger improvement to its earnings outlook than CSL has recently. However, value investors will care about much more than just this.

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.

Our Value category highlights undervalued companies by looking at a variety of key metrics, including the popular P/E ratio, as well as the P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that have been used by value investors for years.

SSUMY currently has a forward P/E ratio of 7.95, while CSL has a forward P/E of 16.55. We also note that SSUMY has a PEG ratio of 1.04. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. CSL currently has a PEG ratio of 1.10.

Another notable valuation metric for SSUMY is its P/B ratio of 1.83. 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, CSL has a P/B of 8.65.

These metrics, and several others, help SSUMY earn a Value grade of A, while CSL has been given a Value grade of C.

SSUMY 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 SSUMY is likely the superior value option right now.

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

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