FLS or NDSN: Which stock currently offers the better price-performance ratio?

Investors looking for Manufacturing – General Industry stocks should consider: Flowserve (NYSE:FLS) or Nordson (NASDAQ:NDSN). But which of these two stocks offers investors the better opportunity for value right now? Let’s take a closer look.

There are many strategies for discovering value stocks, but we have found that combining a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system produces the best returns. The Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.

Flowserve currently has a Zacks Rank of #2 (Buy), while Nordson has a Zacks Rank of #5 (Strong Sell). This means that FLS’s earnings estimate revisions have been more impressive, so investors should feel comfortable with the improved analyst forecast. But that’s only one piece of the puzzle for value investors.

Value investors are also interested in a number of proven valuation metrics that show when a company is undervalued at its current share price.

Our Value category evaluates stocks using a number of key metrics, including the tried-and-true P/E, P/S, earnings yield and cash flow per share, as well as a number of other fundamental metrics commonly used by value investors.

FLS currently has a forward P/E ratio of 18.09, while NDSN has a forward P/E ratio of 24.36. We also note that FLS has a PEG ratio of 1.24. This metric is used similarly to the well-known 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 1.87.

Another important valuation metric for FLS is its P/B ratio of 3.17. 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. For comparison, NDSN has a P/B ratio of 4.76.

These and several other metrics help FLS to earn a B rating, while NDSN receives an F rating.

FLS has seen more estimate revision activity and has more attractive valuation multiples than NDSN, so value investors seem to be concluding that FLS is the better option at the moment.

To read this article on Zacks.com, click here.