Investors looking for stocks in the Manufacturing – General Industrial sector might want to consider either GEA GROUP AG SP (GEAGY) or Idex (IEX). 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 Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.
Right now, both GEA GROUP AG SP and Idex are sporting a Zacks Rank of # 2 (Buy). This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that these stocks have improving earnings outlooks. But this is just one piece of the puzzle for value investors.
Value investors also try to analyze a wide range of traditional figures and metrics to help determine whether 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.
GEAGY currently has a forward P/E ratio of 14.95, while IEX has a forward P/E of 28.70. We also note that GEAGY has a PEG ratio of 1.99. 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. IEX currently has a PEG ratio of 2.46.
Another notable valuation metric for GEAGY is its P/B ratio of 2.53. Investors use the P/B ratio to look at a stock’s market value versus its book value, which is defined as total assets minus total liabilities. By comparison, IEX has a P/B of 5.89.
Based on these metrics and many more, GEAGY holds a Value grade of B, while IEX has a Value grade of D.
Both GEAGY and IEX are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that GEAGY is the superior value option right now.
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