Investors interested in stocks from the Metal Products - Procurement and Fabrication sector have probably already heard of Timken (TKR) and TriMas (TRS). But which of these two stocks presents investors with the better value opportunity right now? Let's take a closer look.
We have found that the best way to discover great value opportunities is to pair a strong Zacks Rank with a great grade in the Value category of our Style Scores system. The proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.
Right now, Timken is sporting a Zacks Rank of #1 (Strong Buy), while TriMas 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 TKR has an improving earnings outlook. But this is just one factor that value investors are interested in.
Value investors analyze a variety of traditional, tried-and-true metrics to help find companies that they believe are undervalued at their 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.
TKR currently has a forward P/E ratio of 11.85, while TRS has a forward P/E of 17.24. We also note that TKR has a PEG ratio of 1.33. 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. TRS currently has a PEG ratio of 3.45.
Another notable valuation metric for TKR is its P/B ratio of 2.36. 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, TRS has a P/B of 2.38.
Based on these metrics and many more, TKR holds a Value grade of B, while TRS has a Value grade of C.
TKR stands above TRS thanks to its solid earnings outlook, and based on these valuation figures, we also feel that TKR is the superior value option right now.
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Timken Company (The) (TKR) : Free Stock Analysis Report
TriMas Corporation (TRS) : Free Stock Analysis Report
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