Investors with an interest in Manufacturing - General Industrial stocks have likely encountered both Tennant (TNC) and Nordson (NASDAQ:NDSN). But which of these two stocks offers value investors a better bang for their buck right now? We'll need to take a closer look.
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 puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
Tennant and Nordson are sporting Zacks Ranks of #2 (Buy) and #3 (Hold), respectively, right now. This means that TNC's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. But this is just one factor that value investors are interested in.
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 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.
TNC currently has a forward P/E ratio of 21.36, while NDSN has a forward P/E of 29.48. We also note that TNC has a PEG ratio of 2.14. 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. NDSN currently has a PEG ratio of 2.27.
Another notable valuation metric for TNC is its P/B ratio of 3.55. 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, NDSN has a P/B of 6.09.
These metrics, and several others, help TNC earn a Value grade of B, while NDSN has been given a Value grade of C.
TNC 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 TNC is likely the superior value option right now.
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Tennant Company (TNC): Free Stock Analysis Report
Nordson Corporation (NDSN): Free Stock Analysis Report
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