ENS vs. EMR: Which Stock Is the Better Value Option?

Investors interested in stocks from the Manufacturing - Electronics sector have probably already heard of EnerSys (ENS) and Emerson Electric (EMR). But which of these two stocks offers value investors a better bang for their buck right now? We'll need to take a closer look.

There are plenty of strategies for discovering value stocks, but we have found that pairing a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system produces the best returns. The Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.

EnerSys has a Zacks Rank of #2 (Buy), while Emerson Electric has a Zacks Rank of #3 (Hold) right now. This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that ENS is likely seeing its earnings outlook improve to a greater extent. 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.

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.

ENS currently has a forward P/E ratio of 9.74, while EMR has a forward P/E of 22.12. We also note that ENS has a PEG ratio of 0.54. 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. EMR currently has a PEG ratio of 2.59.

Another notable valuation metric for ENS is its P/B ratio of 2.01. 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, EMR has a P/B of 3.76.

These are just a few of the metrics contributing to ENS's Value grade of A and EMR's Value grade of C.

ENS has seen stronger estimate revision activity and sports more attractive valuation metrics than EMR, so it seems like value investors will conclude that ENS is the superior option right now.

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

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