Investors interested in stocks from the Metal Products - Procurement and Fabrication sector have probably already heard of Timken (TKR - Free Report) and TriMas (TRS - Free Report) . But which of these two stocks presents investors with the better value opportunity right now? Let's take a closer look.
We have found that the best way to discover great value opportunities is to pair a strong Zacks Rank with a great 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.
Timken and TriMas are sporting Zacks Ranks of #1 (Strong Buy) and #2 (Buy), respectively, right now. This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that TKR is likely seeing its earnings outlook improve to a greater extent. But this is only part of the picture 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 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.
TKR currently has a forward P/E ratio of 8.35, while TRS has a forward P/E of 15.19. We also note that TKR has a PEG ratio of 0.89. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. TRS currently has a PEG ratio of 3.04.
Another notable valuation metric for TKR is its P/B ratio of 1.97. 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, TRS has a P/B of 2.07.
These metrics, and several others, help TKR earn a Value grade of B, while TRS has been given a Value grade of C.
TKR has seen stronger estimate revision activity and sports more attractive valuation metrics than TRS, so it seems like value investors will conclude that TKR is the superior option right now.