Investors interested in Diversified Operations stocks are likely familiar with 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.
Everyone has their own methods for finding great value opportunities, but our model includes pairing an impressive grade in the Value category of our Style Scores system with a strong Zacks Rank. The Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.
Currently, both Grupo Cibest and ITT are holding a Zacks Rank of #2 (Buy). This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that these stocks have improving earnings outlooks. But this is only part of the picture 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 Value category of the Style Scores system identifies undervalued companies by looking at a number of key metrics. These include the long-favored P/E ratio, P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that help us determine a company's fair value.
CIB currently has a forward P/E ratio of 7.37, while ITT has a forward P/E of 27.43. We also note that CIB has a PEG ratio of 0.97. 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 2.04.
Another notable valuation metric for CIB is its P/B ratio of 1.96. The P/B ratio is used to compare a stock's market value with its book value, which is defined as total assets minus total liabilities. For comparison, ITT has a P/B of 4.08.
These are just a few of the metrics contributing to CIB's Value grade of A and ITT's Value grade of D.
Both CIB and ITT are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that CIB is the superior value option right now.
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Grupo Cibest S.A. - Sponsored ADR (CIB): Free Stock Analysis Report
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This article originally published on Zacks Investment Research (zacks.com).