ITRI or AME: Which Is the Better Value Stock Right Now?
Investors interested in stocks from the Electronics - Testing Equipment sector have probably already heard of Itron (ITRI) and Ametek (AME). 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.
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 proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.
Currently, Itron has a Zacks Rank of #2 (Buy), while Ametek has a Zacks Rank of #4 (Sell). This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that ITRI is likely seeing its earnings outlook improve to a greater extent. But this is just one piece of the puzzle for value investors.
Value investors analyze a variety of traditional, tried-and-true metrics to help find companies 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.
ITRI currently has a forward P/E ratio of 22.91, while AME has a forward P/E of 25.13. We also note that ITRI has a PEG ratio of 0.88. 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. AME currently has a PEG ratio of 2.79.
Another notable valuation metric for ITRI is its P/B ratio of 3.74. 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, AME has a P/B of 4.26.
These metrics, and several others, help ITRI earn a Value grade of B, while AME has been given a Value grade of D.
ITRI 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 ITRI is likely the superior value option right now.
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Itron, Inc. (ITRI) : Free Stock Analysis Report
AMETEK, Inc. (AME) : Free Stock Analysis Report