Investors interested in Manufacturing - General Industrial stocks are likely familiar with Dover Corporation (DOV) and Nordson (NDSN). But which of these two stocks presents investors with the better value opportunity right now? Let's 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 proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
Dover Corporation and Nordson are sporting Zacks Ranks of #2 (Buy) and #4 (Sell), respectively, right now. This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that DOV is likely seeing its earnings outlook improve to a greater extent. However, value investors will care about much more than just this.
Value investors are also interested in a number of tried-and-true valuation metrics that help show when 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.
DOV currently has a forward P/E ratio of 16.35, while NDSN has a forward P/E of 24.02. We also note that DOV has a PEG ratio of 1.17. 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. NDSN currently has a PEG ratio of 1.85.
Another notable valuation metric for DOV is its P/B ratio of 4.82. 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 5.07.
These metrics, and several others, help DOV earn a Value grade of B, while NDSN has been given a Value grade of D.
DOV has seen stronger estimate revision activity and sports more attractive valuation metrics than NDSN, so it seems like value investors will conclude that DOV is the superior option right now.
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