Investors interested in Manufacturing - General Industrial stocks are likely familiar with Gorman-Rupp (GRC) and Trimble Navigation (TRMB). 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 proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
Gorman-Rupp and Trimble Navigation 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 also try to analyze a wide range of traditional figures and metrics to help determine whether a company is undervalued at its 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.
GRC currently has a forward P/E ratio of 20.68, while TRMB has a forward P/E of 28.01. We also note that GRC has a PEG ratio of 1.59. 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 2.80.
Another notable valuation metric for GRC is its P/B ratio of 2.79. 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 3.51.
These are just a few of the metrics contributing to GRC's Value grade of B and TRMB's Value grade of F.
Both GRC and TRMB are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that GRC is the superior value option right now.
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Trimble Inc. (TRMB) : Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
