Advertisement
New Zealand markets closed

  • NZX 50

    11,946.43
    +143.15 (+1.21%)
     

  • NZD/USD

    0.5944
    +0.0007 (+0.12%)
     

  • NZD/EUR

    0.5549
    +0.0004 (+0.06%)
     

  • ALL ORDS

    7,937.50
    -0.40 (-0.01%)
     

  • ASX 200

    7,683.00
    -0.50 (-0.01%)
     

  • OIL

    82.72
    -0.09 (-0.11%)
     

  • GOLD

    2,331.50
    -6.90 (-0.30%)
     

  • NASDAQ

    17,526.80
    +55.33 (+0.32%)
     

  • FTSE

    8,040.38
    -4.43 (-0.06%)
     

  • Dow Jones

    38,460.92
    -42.77 (-0.11%)
     

  • DAX

    18,088.70
    -48.95 (-0.27%)
     

  • Hang Seng

    17,276.91
    +75.64 (+0.44%)
     

  • NIKKEI 225

    37,782.70
    -677.38 (-1.76%)
     

  • NZD/JPY

    92.3410
    +0.2260 (+0.25%)
     

HI vs. MSM: Which Stock Is the Better Value Option?

Zacks Equity Research
·2-min read

Investors looking for stocks in the Industrial Services sector might want to consider either Hillenbrand (HI) or MSC Industrial (MSM). But which of these two stocks presents investors with the better value opportunity right now? Let's 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 Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.

Hillenbrand and MSC Industrial 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 HI is likely seeing its earnings outlook improve to a greater extent. However, value investors will care about much more than just this.

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.

ADVERTISEMENT

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.

HI currently has a forward P/E ratio of 9.43, while MSM has a forward P/E of 11.68. We also note that HI has a PEG ratio of 0.79. 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. MSM currently has a PEG ratio of 2.34.

Another notable valuation metric for HI is its P/B ratio of 2.22. The P/B is a method of comparing a stock's market value to its book value, which is defined as total assets minus total liabilities. By comparison, MSM has a P/B of 3.12.

These are just a few of the metrics contributing to HI's Value grade of A and MSM's Value grade of C.

HI 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 HI is likely the superior value option right now.


Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
 
Hillenbrand Inc (HI) : Free Stock Analysis Report
 
MSC Industrial Direct Company, Inc. (MSM) : Free Stock Analysis Report
 
To read this article on Zacks.com click here.
 
Zacks Investment Research