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GEAGY or NDSN: Which Is the Better Value Stock Right Now?

Zacks Equity Research
Nokia (NOK) closed the most recent trading day at $5, moving -0.89% from the previous trading session.

Investors interested in stocks from the Manufacturing - General Industrial sector have probably already heard of GEA GROUP AG SP (GEAGY) and 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.

There are plenty of strategies for discovering value stocks, but we have found that pairing a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system produces the best returns. The Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.

GEA GROUP AG SP and Nordson are sporting Zacks Ranks of #2 (Buy) and #3 (Hold), respectively, right now. This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that GEAGY is likely seeing its earnings outlook improve to a greater extent. But this is just one piece of the puzzle for value investors.

Value investors also tend to look at a number of traditional, tried-and-true figures to help them find stocks 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.

GEAGY currently has a forward P/E ratio of 10.07, while NDSN has a forward P/E of 21.31. We also note that GEAGY has a PEG ratio of 1.34. 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. NDSN currently has a PEG ratio of 1.63.

Another notable valuation metric for GEAGY is its P/B ratio of 1.53. 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, NDSN has a P/B of 5.54.

Based on these metrics and many more, GEAGY holds a Value grade of B, while NDSN has a Value grade of D.

GEAGY has seen stronger estimate revision activity and sports more attractive valuation metrics than NDSN, so it seems like value investors will conclude that GEAGY is the superior option right now.


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