Investors interested in stocks from the Metal Products - Procurement and Fabrication sector have probably already heard of NN Inc. (NNBR) and Esab (ESAB). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.
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.
NN Inc. has a Zacks Rank of #2 (Buy), while Esab has a Zacks Rank of #3 (Hold) right now. This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that NNBR 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 also tend to look at a number of traditional, tried-and-true figures to help them find stocks that they believe are undervalued at their 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.
NNBR currently has a forward P/E ratio of 12.43, while ESAB has a forward P/E of 23.12. We also note that NNBR has a PEG ratio of 0.28. 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. ESAB currently has a PEG ratio of 2.48.
Another notable valuation metric for NNBR is its P/B ratio of 1.76. 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, ESAB has a P/B of 3.78.
These are just a few of the metrics contributing to NNBR's Value grade of A and ESAB's Value grade of D.
NNBR has seen stronger estimate revision activity and sports more attractive valuation metrics than ESAB, so it seems like value investors will conclude that NNBR is the superior option right now.
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NN, Inc. (NNBR): Free Stock Analysis Report ESAB Corporation (ESAB): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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