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IR vs. IEX: Which Stock Is the Better Value Option?

Zacks

Investors with an interest in Manufacturing – General Industrial stocks have likely encountered both Ingersoll-Rand (IR) and Idex (IEX). But which of these two stocks is more attractive to value investors? We’ll need to take a closer look to find out.

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.

Ingersoll-Rand has a Zacks Rank of #2 (Buy), while Idex has a Zacks Rank of #3 (Hold) right now. This means that IR’s earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. However, value investors will care about much more than just this.

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.


Our Value category highlights undervalued companies by looking at a variety of key metrics, including the popular P/E ratio, as well as the P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that have been used by value investors for years.

IR currently has a forward P/E ratio of 18.47, while IEX has a forward P/E of 26.94. We also note that IR has a PEG ratio of 1.59. 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. IEX currently has a PEG ratio of 2.45.

Another notable valuation metric for IR is its P/B ratio of 3.68. 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, IEX has a P/B of 5.53.

These are just a few of the metrics contributing to IR’s Value grade of B and IEX’s Value grade of D.

IR sticks out from IEX in both our Zacks Rank and Style Scores models, so value investors will likely feel that IR is the better option right now.


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