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Investors with an interest in Manufacturing - General Industrial stocks have likely encountered both Altra Industrial Motion (AIMC) and SonoTek Corp. (SOTK). But which of these two stocks presents investors with the better value opportunity right now? Let's take a closer look.
Everyone has their own methods for finding great value opportunities, but our model includes pairing an impressive grade in the Value category of our Style Scores system with a strong Zacks Rank. The proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.
Currently, Altra Industrial Motion has a Zacks Rank of #2 (Buy), while SonoTek Corp. 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 piece of the puzzle for value investors.
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.
AIMC currently has a forward P/E ratio of 16.95, while SOTK has a forward P/E of 45.57. We also note that AIMC has a PEG ratio of 1.13. 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. SOTK currently has a PEG ratio of 3.80.
Another notable valuation metric for AIMC is its P/B ratio of 1.84. 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, SOTK has a P/B of 4.04.
These metrics, and several others, help AIMC earn a Value grade of B, while SOTK has been given a Value grade of C.
AIMC has seen stronger estimate revision activity and sports more attractive valuation metrics than SOTK, so it seems like value investors will conclude that AIMC is the superior option right now.
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Altra Industrial Motion Corp. (AIMC) : Free Stock Analysis Report
SonoTek Corp. (SOTK) : Free Stock Analysis Report
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