Investors looking for stocks in the Manufacturing - General Industrial sector might want to consider either Dover Corporation (DOV) or Idex (IEX). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.
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, Dover Corporation is sporting a Zacks Rank of #2 (Buy), while Idex has a Zacks Rank of #3 (Hold). Investors should feel comfortable knowing that DOV likely has seen a stronger improvement to its earnings outlook than IEX has recently. 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 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.
DOV currently has a forward P/E ratio of 14.43, while IEX has a forward P/E of 25.98. We also note that DOV has a PEG ratio of 1.03. 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. IEX currently has a PEG ratio of 2.16.
Another notable valuation metric for DOV is its P/B ratio of 4.01. 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, IEX has a P/B of 5.58.
These metrics, and several others, help DOV earn a Value grade of B, while IEX has been given a Value grade of D.
DOV is currently sporting an improving earnings outlook, which makes it stick out in our Zacks Rank model. And, based on the above valuation metrics, we feel that DOV is likely the superior value option right now.
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