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AIMC vs. PH: Which Stock Should Value Investors Buy Now?

Zacks Equity Research
·2 min read

Investors with an interest in Manufacturing - General Industrial stocks have likely encountered both Altra Industrial Motion (AIMC) and Parker-Hannifin (PH). But which of these two companies is the best option for those looking for undervalued stocks? 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 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.

Right now, Altra Industrial Motion is sporting a Zacks Rank of #2 (Buy), while Parker-Hannifin has a Zacks Rank of #3 (Hold). The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that AIMC has 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.

The Value category of the Style Scores system identifies undervalued companies by looking at a number of key metrics. These include the long-favored P/E ratio, P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that help us determine a company's fair value.

AIMC currently has a forward P/E ratio of 17.67, while PH has a forward P/E of 19.39. We also note that AIMC has a PEG ratio of 1.18. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. PH currently has a PEG ratio of 1.65.

Another notable valuation metric for AIMC is its P/B ratio of 1.40. 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, PH has a P/B of 4.31.

These metrics, and several others, help AIMC earn a Value grade of B, while PH has been given a Value grade of C.

AIMC is currently sporting an improving earnings outlook, which makes it stick out in our Zacks Rank model. And, based on the above valuation metrics, we feel that AIMC is likely the superior value 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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Zacks Investment Research