IIIN vs. CRS: Which Stock Is the Better Value Option?

Investors interested in stocks from the Steel - Speciality sector have probably already heard of Insteel Industries (IIIN) and Carpenter Technology (CRS). 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 favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.

Right now, both Insteel Industries and Carpenter Technology are sporting a Zacks Rank of #2 (Buy). The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that both of these companies have improving earnings outlooks. However, value investors will care about much more than just this.

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.

Our Value category grades stocks based on a number of key metrics, including the tried-and-true P/E ratio, the P/S ratio, earnings yield, and cash flow per share, as well as a variety of other fundamentals that value investors frequently use.

IIIN currently has a forward P/E ratio of 12.26, while CRS has a forward P/E of 28.42. We also note that IIIN has a PEG ratio of 1.02. This popular figure is similar to the widely-used P/E ratio, but the PEG ratio also considers a company's expected EPS growth rate. CRS currently has a PEG ratio of 1.33.

Another notable valuation metric for IIIN is its P/B ratio of 1.55. 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, CRS has a P/B of 8.41.

Based on these metrics and many more, IIIN holds a Value grade of B, while CRS has a Value grade of D.

Both IIIN and CRS are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that IIIN is the superior value option right now.

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This article originally published on Zacks Investment Research (zacks.com).

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