SSUMY or ITT: Which Is the Better Value Stock Right Now?
In This Article:
Investors interested in stocks from the Diversified Operations sector have probably already heard of Sumitomo Corp. (SSUMY) and ITT (ITT). 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 proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
Sumitomo Corp. and ITT are sporting Zacks Ranks of #2 (Buy) and #3 (Hold), respectively, right now. Investors should feel comfortable knowing that SSUMY likely has seen a stronger improvement to its earnings outlook than ITT has recently. But this is just one piece of the puzzle 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.
SSUMY currently has a forward P/E ratio of 7.46, while ITT has a forward P/E of 23.82. We also note that SSUMY has a PEG ratio of 0.55. 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. ITT currently has a PEG ratio of 1.81.
Another notable valuation metric for SSUMY is its P/B ratio of 0.86. 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, ITT has a P/B of 4.42.
Based on these metrics and many more, SSUMY holds a Value grade of A, while ITT has a Value grade of D.
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.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Sumitomo Corp. (SSUMY) : Free Stock Analysis Report
ITT Inc. (ITT) : Free Stock Analysis Report