Investors interested in stocks from the Diversified Operations sector have probably already heard of Bunzl PLC (BZLFY) and Honeywell International Inc. (HON). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.
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 proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.
Currently, Bunzl PLC has a Zacks Rank of #2 (Buy), while Honeywell International Inc. has a Zacks Rank of #3 (Hold). Investors should feel comfortable knowing that BZLFY likely has seen a stronger improvement to its earnings outlook than HON has recently. 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.
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.
BZLFY currently has a forward P/E ratio of 18.19, while HON has a forward P/E of 21.45. We also note that BZLFY has a PEG ratio of 1.41. 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. HON currently has a PEG ratio of 2.34.
Another notable valuation metric for BZLFY is its P/B ratio of 4.33. 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, HON has a P/B of 7.46.
Based on these metrics and many more, BZLFY holds a Value grade of B, while HON has a Value grade of D.
BZLFY sticks out from HON in both our Zacks Rank and Style Scores models, so value investors will likely feel that BZLFY is the better option right now.
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