Investors interested in stocks from the Manufacturing - General Industrial sector have probably already heard of Oshkosh (OSK) and Ingersoll Rand (IR). 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 puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
Currently, Oshkosh has a Zacks Rank of #1 (Strong Buy), while Ingersoll Rand has a Zacks Rank of #3 (Hold). This means that OSK's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst 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.
OSK currently has a forward P/E ratio of 13.09, while IR has a forward P/E of 23.80. We also note that OSK has a PEG ratio of 1.80. 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. IR currently has a PEG ratio of 4.39.
Another notable valuation metric for OSK is its P/B ratio of 2.06. 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, IR has a P/B of 3.14.
Based on these metrics and many more, OSK holds a Value grade of B, while IR has a Value grade of D.
OSK has seen stronger estimate revision activity and sports more attractive valuation metrics than IR, so it seems like value investors will conclude that OSK is the superior option right now.
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Oshkosh Corporation (OSK): Free Stock Analysis Report Ingersoll Rand Inc. (IR): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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