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JCI vs. ALRM: Which Stock Is the Better Value Option?

Investors with an interest in Security and Safety Services stocks have likely encountered both Johnson Controls (JCI) and Alarm.com Holdings (ALRM). But which of these two stocks presents investors with the better value opportunity right now? Let's take a closer look.

The best way to find great value stocks is to pair a strong Zacks Rank with an impressive 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, Johnson Controls has a Zacks Rank of #2 (Buy), while Alarm.com Holdings has a Zacks Rank of #3 (Hold). Investors should feel comfortable knowing that JCI likely has seen a stronger improvement to its earnings outlook than ALRM 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.

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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.

JCI currently has a forward P/E ratio of 16.79, while ALRM has a forward P/E of 29.64. We also note that JCI has a PEG ratio of 1.24. This popular figure is similar to the widely-used P/E ratio, but the PEG ratio also considers a company's expected EPS growth rate. ALRM currently has a PEG ratio of 3.20.

Another notable valuation metric for JCI is its P/B ratio of 2.33. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. For comparison, ALRM has a P/B of 3.79.

These are just a few of the metrics contributing to JCI's Value grade of B and ALRM's Value grade of D.

JCI sticks out from ALRM in both our Zacks Rank and Style Scores models, so value investors will likely feel that JCI is the better option right now.

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Johnson Controls International plc (JCI) : Free Stock Analysis Report

Alarm.com Holdings, Inc. (ALRM) : Free Stock Analysis Report

To read this article on Zacks.com click here.

Zacks Investment Research