Back to top

NANO vs. WTS: Which Stock Should Value Investors Buy Now?

Read MoreHide Full Article

Investors interested in Instruments - Control stocks are likely familiar with Nanometrics (NANO - Free Report) and Watts Water (WTS - 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 Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.

Currently, Nanometrics has a Zacks Rank of #1 (Strong Buy), while Watts Water has a Zacks Rank of #3 (Hold). 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 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.

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.

NANO currently has a forward P/E ratio of 12.80, while WTS has a forward P/E of 17.08. We also note that NANO has a PEG ratio of 1.07. This figure is similar to the commonly-used P/E ratio, with the PEG ratio also factoring in a company's expected earnings growth rate. WTS currently has a PEG ratio of 1.55.

Another notable valuation metric for NANO is its P/B ratio of 2.35. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. For comparison, WTS has a P/B of 2.70.

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

NANO is currently sporting an improving earnings outlook, which makes it stick out in our Zacks Rank model. And, based on the above valuation metrics, we feel that NANO is likely the superior value option right now.

In-Depth Zacks Research for the Tickers Above

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

Nanometrics Incorporated (NANO) - free report >>

Watts Water Technologies, Inc. (WTS) - free report >>

More from Zacks Tale of the Tape

You May Like

Published in