SSUMY or ITT: Which stock currently offers the better price-performance ratio?

Investors interested in Diversified Operations stock have likely come across both Sumitomo Corp. (OTC:SSUMY) and ITT (NYSE:ITT). But which of these two stocks offers value investors the better value right now? We need to take a closer look.

We have found that the best way to discover great value opportunities is to combine a strong Zacks Rank with an outstanding grade in the Value category of our Style Scores system. The Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.

Currently, both Sumitomo Corp. and ITT sport a Zacks Rank of #2 (Buy). This system focuses on companies that have seen positive earnings revisions, so investors can be confident that these stocks have better earnings prospects. But that’s just one of the factors that value investors care about.

Value investors also tend to use a set of traditional, tried-and-tested numbers to find stocks that they believe are undervalued at their current price levels.

The Value category of the Style Scores system identifies undervalued companies using a number of key metrics, including the long-favored P/E ratio, P/S ratio, earnings yield, cash flow per share, and a number of other fundamentals that help us determine a company’s fair value.

SSUMY currently has a forward P/E ratio of 8.43, while ITT has a forward P/E ratio of 22.21. We also note that SSUMY has a PEG ratio of 0.58. This popular number is similar to the widely used P/E ratio, but the PEG ratio also takes into account a company’s expected EPS growth rate. ITT currently has a PEG ratio of 1.68.

Another important valuation metric for SSUMY is its P/B ratio of 0.93. Investors use the P/B ratio to compare the market value of a stock to its book value, which is defined as total assets minus total liabilities. For comparison, ITT has a P/B ratio of 4.13.

These are just some of the metrics that contribute to the A rating for SSUMY and the D rating for ITT.

Both SSUMY and ITT are impressive stocks with solid earnings prospects, but based on these valuation numbers, we believe SSUMY is the better value option right now.

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