Investors looking for stocks in the Manufacturing - General Industrial sector might want to consider either Luxfer (LXFR) or Xylem (XYL). 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.
Right now, Luxfer is sporting a Zacks Rank of #2 (Buy), while Xylem has a Zacks Rank of #3 (Hold). This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that LXFR is likely seeing its earnings outlook improve to a greater extent. But this is just one factor that value investors are interested in.
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.
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.
LXFR currently has a forward P/E ratio of 15.45, while XYL has a forward P/E of 41.89. We also note that LXFR has a PEG ratio of 1.19. 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. XYL currently has a PEG ratio of 4.19.
Another notable valuation metric for LXFR is its P/B ratio of 2.12. 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, XYL has a P/B of 4.64.
These are just a few of the metrics contributing to LXFR's Value grade of B and XYL's Value grade of C.
LXFR sticks out from XYL in both our Zacks Rank and Style Scores models, so value investors will likely feel that LXFR is the better option right now.
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Luxfer Holdings PLC (LXFR) : Free Stock Analysis Report
Xylem Inc. (XYL) : Free Stock Analysis Report
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