Investors interested in stocks from the Manufacturing - General Industrial sector have probably already heard of Luxfer (LXFR) 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.
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 Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.
Luxfer and Nordson are both sporting a Zacks Rank of #2 (Buy) right now. Investors should feel comfortable knowing that both of these stocks have an improving earnings outlook since the Zacks Rank favors companies that have witnessed positive analyst estimate revisions. But this is just one factor that value investors are interested in.
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.
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.
LXFR currently has a forward P/E ratio of 12.85, while NDSN has a forward P/E of 24.44. We also note that LXFR has a PEG ratio of 1.84. 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. NDSN currently has a PEG ratio of 1.88.
Another notable valuation metric for LXFR is its P/B ratio of 1.86. 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, NDSN has a P/B of 5.
These metrics, and several others, help LXFR earn a Value grade of B, while NDSN has been given a Value grade of D.
Both LXFR and NDSN are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that LXFR is the superior value option right now.
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Luxfer Holdings PLC (LXFR): Free Stock Analysis Report
Nordson Corporation (NDSN): Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).