Investors interested in stocks from the Metal Products - Procurement and Fabrication sector have probably already heard of AB SKF (SKFRY) and Esab (ESAB). But which of these two companies is the best option for those looking for undervalued stocks? Let's take a closer look.

The best way to find great value stocks is to pair a strong Zacks Rank with an impressive 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.

AB SKF and Esab are sporting Zacks Ranks of #1 (Strong Buy) and #3 (Hold), respectively, right now. This means that SKFRY'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.

The Value category of the Style Scores system identifies undervalued companies by looking at a number of key metrics. These include the long-favored P/E ratio, P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that help us determine a company's fair value.

SKFRY currently has a forward P/E ratio of 13.31, while ESAB has a forward P/E of 22.77. We also note that SKFRY has a PEG ratio of 1.14. 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. ESAB currently has a PEG ratio of 2.74.

Another notable valuation metric for SKFRY is its P/B ratio of 1.70. The 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. By comparison, ESAB has a P/B of 3.98.

These are just a few of the metrics contributing to SKFRY's Value grade of B and ESAB's Value grade of D.

SKFRY 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 SKFRY is likely the superior value option right now.

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This article originally published on Zacks Investment Research (zacks.com).

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