IR vs. FLS: Which Stock Should Value Investors Buy Now?
Investors interested in stocks from the Manufacturing - General Industrial sector have probably already heard of Ingersoll-Rand (IR) and Flowserve (FLS). But which of these two stocks presents investors with the better value opportunity right now? Let's 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 proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.
Currently, Ingersoll-Rand has a Zacks Rank of #2 (Buy), while Flowserve has a Zacks Rank of #3 (Hold). This means that IR's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. However, value investors will care about much more than just this.
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 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.
IR currently has a forward P/E ratio of 18.60, while FLS has a forward P/E of 31.19. We also note that IR has a PEG ratio of 1.61. 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. FLS currently has a PEG ratio of 1.81.
Another notable valuation metric for IR is its P/B ratio of 3.70. 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, FLS has a P/B of 4.20.
These metrics, and several others, help IR earn a Value grade of B, while FLS has been given a Value grade of C.
IR stands above FLS thanks to its solid earnings outlook, and based on these valuation figures, we also feel that IR is the superior value option right now.
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Ingersoll-Rand PLC (Ireland) (IR) : Free Stock Analysis Report
Flowserve Corporation (FLS) : Free Stock Analysis Report
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