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FERG vs. ATLKY: Which Stock Should Value Investors Buy Now?

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Investors looking for stocks in the Manufacturing - General Industrial sector might want to consider either Wolseley PLC (FERG - Free Report) or Atlas Copco AB (ATLKY - Free Report) . But which of these two companies is the best option for those looking for undervalued stocks? Let's take a closer look.

There are plenty of strategies for discovering value stocks, but we have found that pairing a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system produces the best returns. The proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.

Wolseley PLC has a Zacks Rank of #2 (Buy), while Atlas Copco AB has a Zacks Rank of #4 (Sell) right now. This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that FERG is likely seeing its earnings outlook improve to a greater extent. But this is only part of the picture for value investors.

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.

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.

FERG currently has a forward P/E ratio of 11.80, while ATLKY has a forward P/E of 20.76. We also note that FERG has a PEG ratio of 0.88. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. ATLKY currently has a PEG ratio of 3.39.

Another notable valuation metric for FERG is its P/B ratio of 5.09. 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, ATLKY has a P/B of 5.80.

These are just a few of the metrics contributing to FERG's Value grade of B and ATLKY's Value grade of C.

FERG sticks out from ATLKY in both our Zacks Rank and Style Scores models, so value investors will likely feel that FERG is the better option right now.


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Atlas Copco AB (ATLKY) - free report >>

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