Investors interested in stocks from the Steel - Speciality sector have probably already heard of Insteel Industries (IIIN) and Carpenter Technology (CRS). 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 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.
Insteel Industries and Carpenter Technology are both sporting a Zacks Rank of #2 (Buy) right now. 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 just one factor that value investors are interested in.
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.
Our Value category highlights undervalued companies by looking at a variety of key metrics, including the popular P/E ratio, as well as the P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that have been used by value investors for years.
IIIN currently has a forward P/E ratio of 11.56, while CRS has a forward P/E of 33.21. We also note that IIIN has a PEG ratio of 0.96. 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. CRS currently has a PEG ratio of 1.34.
Another notable valuation metric for IIIN is its P/B ratio of 1.9. 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, CRS has a P/B of 8.5.
These metrics, and several others, help IIIN earn a Value grade of B, while CRS has been given a Value grade of D.
Both IIIN and CRS are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that IIIN is the superior value option right now.
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Insteel Industries, Inc. (IIIN): Free Stock Analysis Report Carpenter Technology Corporation (CRS): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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