Investors with an interest in Manufacturing - General Industrial stocks have likely encountered both 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.
Oshkosh and Ingersoll Rand are sporting Zacks Ranks of #1 (Strong Buy) and #3 (Hold), respectively, right now. This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that OSK is likely seeing its earnings outlook improve to a greater extent. But this is just one factor that value investors are interested in.
Value investors are also interested in a number of tried-and-true valuation metrics that help show when a company is undervalued at its current share price levels.
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.
OSK currently has a forward P/E ratio of 12.53, while IR has a forward P/E of 23.35. We also note that OSK has a PEG ratio of 1.72. 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. IR currently has a PEG ratio of 4.31.
Another notable valuation metric for OSK is its P/B ratio of 1.97. 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, IR has a P/B of 3.08.
These are just a few of the metrics contributing to OSK's Value grade of B and IR's Value grade of D.
OSK is currently sporting an improving earnings outlook, which makes it stick out in our Zacks Rank model. And, based on the above valuation metrics, we feel that OSK is likely the superior value 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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