GRC or TRMB: Which Is the Better Value Stock Right Now?

Investors with an interest in Manufacturing - General Industrial stocks have likely encountered both Gorman-Rupp (GRC) and Trimble Navigation (TRMB). But which of these two companies is the best option for those looking for undervalued stocks? Let's take a closer look.

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 proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.

Right now, both Gorman-Rupp and Trimble Navigation are sporting a Zacks Rank of #2 (Buy). This means that both companies have witnessed positive earnings estimate revisions, so investors should feel comfortable knowing that both of these stocks have an improving earnings outlook. But this is only part of the picture for value investors.

Value investors analyze a variety of traditional, tried-and-true metrics to help find companies that they believe are undervalued at their current share price levels.

The Style Score Value grade factors in a variety of key fundamental metrics, including the popular P/E ratio, P/S ratio, earnings yield, cash flow per share, and a number of other key stats that are commonly used by value investors.

GRC currently has a forward P/E ratio of 21.84, while TRMB has a forward P/E of 27.34. We also note that GRC has a PEG ratio of 1.68. 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. TRMB currently has a PEG ratio of 2.73.

Another notable valuation metric for GRC is its P/B ratio of 2.95. 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, TRMB has a P/B of 3.43.

These metrics, and several others, help GRC earn a Value grade of B, while TRMB has been given a Value grade of D.

Both GRC and TRMB are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that GRC is the superior value option right now.

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This article originally published on Zacks Investment Research (zacks.com).

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