Investors interested in Instruments - Control stocks are likely familiar with Nanometrics (NANO - Free Report) and Badger Meter (BMI - 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 Zacks Rank is a proven strategy that targets companies with positive earnings estimate revision trends, while our Style Scores work to grade companies based on specific traits.
Nanometrics and Badger Meter are sporting Zacks Ranks of #1 (Strong Buy) and #3 (Hold), respectively, right now. The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that NANO has an improving earnings outlook. But this is just one piece of the puzzle 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.
NANO currently has a forward P/E ratio of 17.08, while BMI has a forward P/E of 33.35. We also note that NANO has a PEG ratio of 1.42. 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. BMI currently has a PEG ratio of 3.71.
Another notable valuation metric for NANO is its P/B ratio of 3.54. 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, BMI has a P/B of 4.75.
These are just a few of the metrics contributing to NANO's Value grade of B and BMI's Value grade of D.
NANO stands above BMI thanks to its solid earnings outlook, and based on these valuation figures, we also feel that NANO is the superior value option right now.