Investors interested in Manufacturing - General Industrial stocks are likely familiar with Altra Industrial Motion (AIMC) and Parker-Hannifin (PH). 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.
Currently, Altra Industrial Motion has a Zacks Rank of #2 (Buy), while Parker-Hannifin 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 AIMC 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 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.
AIMC currently has a forward P/E ratio of 16.98, while PH has a forward P/E of 18.73. We also note that AIMC has a PEG ratio of 1.13. 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. PH currently has a PEG ratio of 1.59.
Another notable valuation metric for AIMC is its P/B ratio of 1.34. 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, PH has a P/B of 4.16.
Based on these metrics and many more, AIMC holds a Value grade of B, while PH has a Value grade of C.
AIMC sticks out from PH in both our Zacks Rank and Style Scores models, so value investors will likely feel that AIMC is the better option right now.
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Altra Industrial Motion Corp. (AIMC): Free Stock Analysis Report
ParkerHannifin Corporation (PH): Free Stock Analysis Report
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.