Investors looking for stocks in the Manufacturing - General Industrial sector might want to consider either Mueller Water Products (MWA) or Nordson (NDSN). 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.
We have found that the best way to discover great value opportunities is to pair a strong Zacks Rank with a great grade in the Value category of our Style Scores system. The proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.
Mueller Water Products and Nordson are both sporting a Zacks Rank of #2 (Buy) right now. Investors should feel comfortable knowing that both of these stocks have an improving earnings outlook since the Zacks Rank favors companies that have witnessed positive analyst estimate revisions. 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 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.
MWA currently has a forward P/E ratio of 17.90, while NDSN has a forward P/E of 23.35. We also note that MWA has a PEG ratio of 1.19. 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. NDSN currently has a PEG ratio of 1.80.
Another notable valuation metric for MWA is its P/B ratio of 4.02. Investors use the P/B ratio to look at a stock's market value versus its book value, which is defined as total assets minus total liabilities. By comparison, NDSN has a P/B of 4.82.
These are just a few of the metrics contributing to MWA's Value grade of B and NDSN's Value grade of D.
Both MWA and NDSN are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that MWA is the superior value option right now.
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Nordson Corporation (NDSN) : 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.
