Investors interested in stocks from the Manufacturing - General Industrial sector have probably already heard of Gorman-Rupp (GRC) and Nordson (NDSN). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.
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 Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.
Gorman-Rupp and Nordson are sporting Zacks Ranks of #2 (Buy) and #3 (Hold), respectively, right now. This means that GRC's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. But this is just one factor that value investors are interested in.
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.
Our Value category highlights undervalued companies by looking at a variety of key metrics, including the popular P/E ratio, as well as the P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that have been used by value investors for years.
GRC currently has a forward P/E ratio of 20.26, while NDSN has a forward P/E of 22.02. We also note that GRC has a PEG ratio of 1.56. This figure is similar to the commonly-used P/E ratio, with the PEG ratio also factoring in a company's expected earnings growth rate. NDSN currently has a PEG ratio of 1.69.
Another notable valuation metric for GRC is its P/B ratio of 2.73. The P/B ratio is used to compare a stock's market value with its book value, which is defined as total assets minus total liabilities. For comparison, NDSN has a P/B of 4.2.
These metrics, and several others, help GRC earn a Value grade of B, while NDSN has been given a Value grade of D.
GRC stands above NDSN thanks to its solid earnings outlook, and based on these valuation figures, we also feel that GRC is the superior value option right now.
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Gorman-Rupp Company (The) (GRC): Free Stock Analysis Report Nordson Corporation (NDSN): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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