Investors looking for stocks in the Manufacturing - General Industrial sector might want to consider either Wolseley PLC (FERGY - Free Report) or Idex (IEX - 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 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 Idex has a Zacks Rank of #3 (Hold) right now. The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that FERGY has an improving earnings outlook. But this is just one piece of the puzzle for value investors.
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.
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.
FERGY currently has a forward P/E ratio of 14.77, while IEX has a forward P/E of 28.96. We also note that FERGY has a PEG ratio of 0.89. 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. IEX currently has a PEG ratio of 2.63.
Another notable valuation metric for FERGY is its P/B ratio of 4.09. 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, IEX has a P/B of 5.91.
These metrics, and several others, help FERGY earn a Value grade of A, while IEX has been given a Value grade of D.
FERGY has seen stronger estimate revision activity and sports more attractive valuation metrics than IEX, so it seems like value investors will conclude that FERGY is the superior option right now.