Investors interested in Manufacturing - General Industrial stocks are likely familiar with Luxfer (LXFR) and Nordson (NDSN). But which of these two stocks offers value investors a better bang for their buck right now? We'll need to take a closer look.
We have found that the best way to discover great value opportunities is to pair a strong Zacks Rank with a great 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.
Luxfer and Nordson are sporting Zacks Ranks of #2 (Buy) and #3 (Hold), respectively, right now. The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that LXFR has an improving earnings outlook. But this is only part of the picture 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.
LXFR currently has a forward P/E ratio of 12.10, while NDSN has a forward P/E of 21.30. We also note that LXFR has a PEG ratio of 1.51. 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. NDSN currently has a PEG ratio of 1.64.
Another notable valuation metric for LXFR is its P/B ratio of 1.4. 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, NDSN has a P/B of 4.08.
These metrics, and several others, help LXFR earn a Value grade of A, while NDSN has been given a Value grade of D.
LXFR stands above NDSN thanks to its solid earnings outlook, and based on these valuation figures, we also feel that LXFR is the superior value option right now.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Luxfer Holdings PLC (LXFR): Free Stock Analysis Report Nordson Corporation (NDSN): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
Zacks Investment Research
