Investors looking for stocks in the Manufacturing - Electronics sector might want to consider either Rexnord (RXN - Free Report) or II-VI (IIVI - Free Report) . But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.
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 proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.
Rexnord has a Zacks Rank of #2 (Buy), while II-VI 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 RXN is likely seeing its earnings outlook improve to a greater extent. But this is just one piece of the puzzle for value investors.
Value investors analyze a variety of traditional, tried-and-true metrics to help find companies that they believe are undervalued at their current share price levels.
The Style Score Value grade factors in a variety of key fundamental metrics, including the popular P/E ratio, P/S ratio, earnings yield, cash flow per share, and a number of other key stats that are commonly used by value investors.
RXN currently has a forward P/E ratio of 16.20, while IIVI has a forward P/E of 18.71. We also note that RXN has a PEG ratio of 0.99. 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. IIVI currently has a PEG ratio of 1.10.
Another notable valuation metric for RXN is its P/B ratio of 2.59. The P/B ratio is used to compare a stock's market value with its book value, which is defined as total assets minus total liabilities. For comparison, IIVI has a P/B of 2.76.
These are just a few of the metrics contributing to RXN's Value grade of A and IIVI's Value grade of C.
RXN stands above IIVI thanks to its solid earnings outlook, and based on these valuation figures, we also feel that RXN is the superior value option right now.