VWDRY or ABBNY: Which Is the Better Value Stock Right Now?

Investors looking for stocks in the Manufacturing - Electronics sector might want to consider either Vestas Wind Systems AS (VWDRY) or ABB (ABBNY). But which of these two companies is the best option for those looking for undervalued stocks? Let's take a closer look.

The best way to find great value stocks is to pair a strong Zacks Rank with an impressive 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.

Right now, Vestas Wind Systems AS is sporting a Zacks Rank of #2 (Buy), while ABB has a Zacks Rank of #3 (Hold). This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that VWDRY is likely seeing its earnings outlook improve to a greater extent. But this is only part of the picture 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 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.

VWDRY currently has a forward P/E ratio of 25.12, while ABBNY has a forward P/E of 28.64. We also note that VWDRY has a PEG ratio of 0.62. 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. ABBNY currently has a PEG ratio of 2.06.

Another notable valuation metric for VWDRY is its P/B ratio of 7.67. 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, ABBNY has a P/B of 10.4.

These are just a few of the metrics contributing to VWDRY's Value grade of B and ABBNY's Value grade of D.

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

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

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