Investors interested in stocks from the Manufacturing - General Industrial sector have probably already heard of Ingersoll-Rand (IR) and Idex (IEX). 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.
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 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, both Ingersoll-Rand and Idex are sporting a Zacks Rank of # 2 (Buy). This means that both companies have witnessed positive earnings estimate revisions, so investors should feel comfortable knowing that both of these stocks have an improving earnings outlook. But this is only part of the picture for value investors.
Value investors are also interested in a number of tried-and-true valuation metrics that help show when 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.
IR currently has a forward P/E ratio of 18.44, while IEX has a forward P/E of 25.11. We also note that IR has a PEG ratio of 1.53. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. IEX currently has a PEG ratio of 2.45.
Another notable valuation metric for IR is its P/B ratio of 3.44. 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, IEX has a P/B of 5.01.
These are just a few of the metrics contributing to IR's Value grade of B and IEX's Value grade of D.
Both IR and IEX are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that IR is the superior value option right now.
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Ingersoll-Rand PLC (Ireland) (IR) : Free Stock Analysis Report
IDEX Corporation (IEX) : Free Stock Analysis Report
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