FERG or GGG: Which Is the Better Value Stock Right Now?
FERG vs. GGG: Which Stock Is the Better Value Option?
Investors looking for stocks in the Manufacturing - General Industrial sector might want to consider either Wolseley PLC (FERG) or Graco Inc. (GGG). But which of these two stocks presents investors with the better value opportunity right now? Let's 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.
Currently, both Wolseley PLC and Graco Inc. are holding a Zacks Rank of # 2 (Buy). This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that these stocks have improving earnings outlooks. But this is only part of the picture 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 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.
FERG currently has a forward P/E ratio of 21.84, while GGG has a forward P/E of 33.37. We also note that FERG has a PEG ratio of 2.10. This popular figure is similar to the widely-used P/E ratio, but the PEG ratio also considers a company's expected EPS growth rate. GGG currently has a PEG ratio of 4.17.
Another notable valuation metric for FERG is its P/B ratio of 8.46. Investors use the P/B ratio to look at a stock's market value versus its book value, which is defined as total assets minus total liabilities. By comparison, GGG has a P/B of 8.74.
These are just a few of the metrics contributing to FERG's Value grade of B and GGG's Value grade of D.
Both FERG and GGG are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that FERG is the superior value option right now.
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Wolseley PLC (FERG): Free Stock Analysis Report
Graco Inc. (GGG): Free Stock Analysis Report
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