Investors looking for stocks in the Manufacturing - Tools & Related Products sector might want to consider either Core & Main (CNM) or Lincoln Electric $LECO Holdings (LECO). But which of these two companies is the best option for those looking for undervalued stocks? 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 Zacks Rank is a proven strategy that targets companies with positive earnings estimate revision trends, while our Style Scores work to grade companies based on specific traits.
Core & Main and Lincoln Electric Holdings are sporting Zacks Ranks of #2 (Buy) and #3 (Hold), respectively, right now. Investors should feel comfortable knowing that CNM likely has seen a stronger improvement to its earnings outlook than LECO has recently. However, value investors will care about much more than just this.
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 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.
CNM currently has a forward P/E ratio of 14.83, while LECO has a forward P/E of 24.90. We also note that CNM has a PEG ratio of 1.57. 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. LECO currently has a PEG ratio of 1.66.
Another notable valuation metric for CNM is its P/B ratio of 4.28. 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, LECO has a P/B of 9.77.
These are just a few of the metrics contributing to CNM's Value grade of B and LECO's Value grade of D.
CNM stands above LECO thanks to its solid earnings outlook, and based on these valuation figures, we also feel that CNM is the superior value option right now.
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Core & Main, Inc. (CNM): Free Stock Analysis Report
Lincoln Electric Holdings, Inc. (LECO): Free Stock Analysis Report