Investors with an interest in Manufacturing - Tools & Related Products stocks have likely encountered both Kennametal (KMT) and Techtronic Industries Co. (TTNDY). 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.
The best way to find great value stocks is to pair a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system. 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, Kennametal has a Zacks Rank of #1 (Strong Buy), while Techtronic Industries Co. 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 KMT has an improving earnings outlook. But this is only part of the picture for value investors.
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 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.
KMT currently has a forward P/E ratio of 11.47, while TTNDY has a forward P/E of 21.03. We also note that KMT has a PEG ratio of 0.22. 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. TTNDY currently has a PEG ratio of 1.14.
Another notable valuation metric for KMT is its P/B ratio of 1.86. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. For comparison, TTNDY has a P/B of 4.31.
These are just a few of the metrics contributing to KMT's Value grade of B and TTNDY's Value grade of C.
KMT has seen stronger estimate revision activity and sports more attractive valuation metrics than TTNDY, so it seems like value investors will conclude that KMT is the superior option right now.
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Kennametal Inc. (KMT): Free Stock Analysis Report
Techtronic Industries Co. (TTNDY): Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).