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AIMC 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 Altra Industrial Motion 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.

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 favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.

Currently, Altra Industrial Motion has a Zacks Rank of #2 (Buy), while SonoTek Corp. 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 AIMC is likely seeing its earnings outlook improve to a greater extent. But this is only part of the picture for value investors.

Value investors also try to analyze a wide range of traditional figures and metrics to help determine whether a company is undervalued at its current share price levels.

Our Value category grades stocks based on a number of key metrics, including the tried-and-true P/E ratio, the P/S ratio, earnings yield, and cash flow per share, as well as a variety of other fundamentals that value investors frequently use.

AIMC currently has a forward P/E ratio of 19.29, while SOTK has a forward P/E of 48.29. We also note that AIMC has a PEG ratio of 1.29. 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 3.71.

Another notable valuation metric for AIMC is its P/B ratio of 2.03. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. For comparison, SOTK has a P/B of 4.28.

These are just a few of the metrics contributing to AIMC's Value grade of B and SOTK's Value grade of C.

AIMC is currently sporting an improving earnings outlook, which makes it stick out in our Zacks Rank model. And, based on the above valuation metrics, we feel that AIMC is likely the superior value option right now.


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