Back to top

Image: Bigstock

HLIO vs. KAI: Which Stock Should Value Investors Buy Now?

Read MoreHide Full Article

Investors interested in stocks from the Manufacturing - General Industrial sector have probably already heard of Helios Technologies (HLIO - Free Report) and Kadant (KAI - Free Report) . But which of these two stocks presents investors with the better value opportunity right now? Let's 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 proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.

Right now, Helios Technologies is sporting a Zacks Rank of #2 (Buy), while Kadant has a Zacks Rank of #3 (Hold). Investors should feel comfortable knowing that HLIO likely has seen a stronger improvement to its earnings outlook than KAI has recently. But this is only part of the picture for value investors.

Value investors also try to analyze a wide range of traditional figures and metrics to help determine whether a company is undervalued at its current share price levels.

The Value category of the Style Scores system identifies undervalued companies by looking at a number of key metrics. These include the long-favored P/E ratio, P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that help us determine a company's fair value.

HLIO currently has a forward P/E ratio of 14.68, while KAI has a forward P/E of 20.89. We also note that HLIO has a PEG ratio of 1.22. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. KAI currently has a PEG ratio of 2.61.

Another notable valuation metric for HLIO is its P/B ratio of 2.96. 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, KAI has a P/B of 3.61.

Based on these metrics and many more, HLIO holds a Value grade of B, while KAI has a Value grade of C.

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


In-Depth Zacks Research for the Tickers Above


Normally $25 each - click below to receive one report FREE:


Kadant Inc (KAI) - free report >>

Helios Technologies, Inc (HLIO) - free report >>

Published in