IIIN vs. CRS: Which Stock Is the Better Value Option?

Investors with an interest in Steel - Speciality stocks have likely encountered both Insteel Industries (IIIN) and Carpenter Technology (CRS). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.

Everyone has their own methods for finding great value opportunities, but our model includes pairing an impressive grade in the Value category of our Style Scores system with a strong Zacks Rank. The proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.

Both Insteel Industries and Carpenter Technology have 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 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.

IIIN currently has a forward P/E ratio of 12.54, while CRS has a forward P/E of 38.67. We also note that IIIN has a PEG ratio of 1.04. This figure is similar to the commonly-used P/E ratio, with the PEG ratio also factoring in a company's expected earnings growth rate. CRS currently has a PEG ratio of 1.56.

Another notable valuation metric for IIIN is its P/B ratio of 2.06. The P/B is a method of comparing a stock's market value to its book value, which is defined as total assets minus total liabilities. By comparison, CRS has a P/B of 9.97.

These are just a few of the metrics contributing to IIIN's Value grade of B and CRS's Value grade of F.

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

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