Investors interested in stocks from the Manufacturing - General Industrial sector have probably already heard of Flowserve (FLS) 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.
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 is a proven strategy that targets companies with positive earnings estimate revision trends, while our Style Scores work to grade companies based on specific traits.
Flowserve has a Zacks Rank of #2 (Buy), while Nordson has a Zacks Rank of #3 (Hold) right now. This means that FLS's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. However, value investors will care about much more than just this.
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.
FLS currently has a forward P/E ratio of 20.27, while NDSN has a forward P/E of 20.84. We also note that FLS has a PEG ratio of 1.38. 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 1.60.
Another notable valuation metric for FLS is its P/B ratio of 3.8. 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, NDSN has a P/B of 4.34.
Based on these metrics and many more, FLS holds a Value grade of B, while NDSN has a Value grade of D.
FLS sticks out from NDSN in both our Zacks Rank and Style Scores models, so value investors will likely feel that FLS is the better option right now.
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Flowserve Corporation (FLS): Free Stock Analysis Report Nordson Corporation (NDSN): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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