Investors looking for stocks in the Manufacturing - Tools & Related Products sector might want to consider either Stanley Black & Decker (SWK) or Techtronic Industries Co. (TTNDY). But which of these two stocks presents investors with the better value opportunity right now? Let's 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 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.

Stanley Black & Decker has a Zacks Rank of #2 (Buy), while Techtronic Industries Co. has a Zacks Rank of #3 (Hold) right now. Investors should feel comfortable knowing that SWK likely has seen a stronger improvement to its earnings outlook than TTNDY has recently. However, value investors will care about much more than just this.

Value investors are also interested in a number of tried-and-true valuation metrics that help show when a company is undervalued at its 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.

SWK currently has a forward P/E ratio of 17.90, while TTNDY has a forward P/E of 22.67. We also note that SWK has a PEG ratio of 1.34. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. TTNDY currently has a PEG ratio of 1.47.

Another notable valuation metric for SWK is its P/B ratio of 1.68. 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, TTNDY has a P/B of 4.67.

These are just a few of the metrics contributing to SWK's Value grade of B and TTNDY's Value grade of C.

SWK stands above TTNDY thanks to its solid earnings outlook, and based on these valuation figures, we also feel that SWK is the superior value option right now.

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Stanley Black & Decker, Inc. (SWK): Free Stock Analysis Report

 

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

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