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

Investors interested in stocks from the Manufacturing - General Industrial sector have probably already heard of 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 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.

Currently, Gorman-Rupp has a Zacks Rank of #2 (Buy), while Trimble Navigation has a Zacks Rank of #3 (Hold). This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that GRC is likely seeing its earnings outlook improve to a greater extent. But this is just one piece of the puzzle for value investors.

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.

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 19.61, while TRMB has a forward P/E of 24.68. We also note that GRC has a PEG ratio of 1.51. 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 2.47.

Another notable valuation metric for GRC is its P/B ratio of 2.69. The P/B ratio is used to compare a stock's market value with its book value, which is defined as total assets minus total liabilities. For comparison, TRMB has a P/B of 3.14.

These are just a few of the metrics contributing to GRC's Value grade of B and TRMB's Value grade of D.

GRC has seen stronger estimate revision activity and sports more attractive valuation metrics than TRMB, so it seems like value investors will conclude that GRC is the superior option right now.

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

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