Investors interested in Technology Services stocks are likely familiar with Rocket Companies (RKT) and Trane Technologies (TT). But which of these two stocks presents investors with the better value opportunity right now? Let's take a closer look.
Everyone has their own methods for finding great value opportunities, but our model includes pairing an impressive grade in the Value category of our Style Scores system with a strong Zacks Rank. The proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.
Right now, Rocket Companies is sporting a Zacks Rank of #1 (Strong Buy), while Trane Technologies has a Zacks Rank of #3 (Hold). The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that RKT has an improving earnings outlook. But this is just one piece of the puzzle for value investors.
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.
Our Value category grades stocks based on a number of key metrics, including the tried-and-true P/E ratio, the P/S ratio, earnings yield, and cash flow per share, as well as a variety of other fundamentals that value investors frequently use.
RKT currently has a forward P/E ratio of 8.71, while TT has a forward P/E of 31.39. We also note that RKT has a PEG ratio of 0.87. 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. TT currently has a PEG ratio of 2.39.
Another notable valuation metric for RKT is its P/B ratio of 5.57. 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, TT has a P/B of 6.42.
These metrics, and several others, help RKT earn a Value grade of A, while TT has been given a Value grade of C.
RKT stands above TT thanks to its solid earnings outlook, and based on these valuation figures, we also feel that RKT is the superior value option right now.
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Rocket Companies, Inc. (RKT) : Free Stock Analysis Report
Trane Technologies plc (TT) : Free Stock Analysis Report
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