Investors interested in Manufacturing - General Industrial stocks are likely familiar with EnPro Industries (NPO) and Xylem (XYL). 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 proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
Currently, EnPro Industries has a Zacks Rank of #2 (Buy), while Xylem has a Zacks Rank of #4 (Sell). Investors should feel comfortable knowing that NPO likely has seen a stronger improvement to its earnings outlook than XYL has recently. 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.
The Style Score Value grade factors in a variety of key fundamental metrics, including the popular P/E ratio, P/S ratio, earnings yield, cash flow per share, and a number of other key stats that are commonly used by value investors.
NPO currently has a forward P/E ratio of 13.68, while XYL has a forward P/E of 23.32. We also note that NPO has a PEG ratio of 0.71. 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. XYL currently has a PEG ratio of 1.94.
Another notable valuation metric for NPO is its P/B ratio of 0.94. Investors use the P/B ratio to look at a stock's market value versus its book value, which is defined as total assets minus total liabilities. By comparison, XYL has a P/B of 4.02.
Based on these metrics and many more, NPO holds a Value grade of B, while XYL has a Value grade of D.
NPO has seen stronger estimate revision activity and sports more attractive valuation metrics than XYL, so it seems like value investors will conclude that NPO is the superior option right now.
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