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NPO vs. SOTK: Which Stock Is the Better Value Option?

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Investors looking for stocks in the Manufacturing - General Industrial sector might want to consider either EnPro Industries (NPO - Free Report) or SonoTek Corp. (SOTK - Free Report) . But which of these two stocks presents investors with the better value opportunity right now? Let's take a closer look.

There are plenty of strategies for discovering value stocks, but we have found that pairing a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system produces the best returns. 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.

Both EnPro Industries and SonoTek Corp. have a Zacks Rank of # 2 (Buy) right now. The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that both of these companies have improving earnings outlooks. However, value investors will care about much more than just this.

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 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.

NPO currently has a forward P/E ratio of 28.30, while SOTK has a forward P/E of 60. We also note that NPO has a PEG ratio of 1.48. 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. SOTK currently has a PEG ratio of 4.62.

Another notable valuation metric for NPO is its P/B ratio of 1.53. 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, SOTK has a P/B of 6.20.

Based on these metrics and many more, NPO holds a Value grade of B, while SOTK has a Value grade of F.

Both NPO and SOTK are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that NPO is the superior value option right now.


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