Based on key financial metrics such as the price-to-sales ratio, shareholder yield and the price-earnings ratio, the following 3 stocks made the list for top value stocks in the Industrial Machinery & Equipment industry. Those looking for value stocks to add to their portfolio may want to use this list as a starting point for further investment research.

Latest Industrial Machinery & Equipment Stock News

Before choosing which top Industrial Machinery & Equipment stock to buy, be sure to conduct proper due diligence: analyze various financial metrics and look at historical data, public statements and news coverage.

Our fundamental investment outlook for the Industrial Machinery & Equipment industry is neutral, reflecting our outlook for a gradual demand recovery in manufacturing and machinery usage in the U.S. and a gradual (and volatile) global recovery from Covid-19. In 2021, we expect a return to growth in the European economy, with most growth weighted towards the second half of the year. There has been little enforcement of the Phase 1 trade deal between the U.S. and China signed in January of 2020, but we expect a new U.S. administration and recovery from the Covid-19 pandemic to shift focus back to trade in late 2021 or early 2022. Under new U.S. president Biden, we expect a change in foreign trade relations and think there will be more predictability in trade actions. According to the Federal Reserve, May 2021 industrial production expanded 0.8% to 99.9% vs. 99.0% in April (compared to the 2017 average). Manufacturing utilization was 75.6% in May, vs. 74.9% in April. For 2021, we expect average manufacturing utilization to remain volatile and below the 78.2% long-term average (1972-2019), reflecting supply shortages and supply chain delays. Total capacity utilization for the industrial sector increased slightly to 75.2% in May from 74.6% in April. We expect the 2021 rate to continue to exceed the all-time low of 66.7% in June 2009, but be shy of the historical average of 79.6%. Recent national PMI (Purchasing Managers' Index) data indicates continuing economic expansion in the manufacturing sector. A score above 50 generally indicates expansion of the manufacturing economy over the next three to six months. The most recent reading was above this threshold. Demand levels are rising rapidly, which is actually putting stress on suppliers who are struggling to keep up with the rate of demand growth. Lead times are elongated, materials are in shortage, commodity prices are rising, and freight costs and logistics are creating headwinds.

Why Focus on Undervalued Industrial Machinery & Equipment Stocks?

Value investors seek to buy stocks at a discount to their intrinsic value. Long-term returns show that such strategies are advantageous. Value stocks, as a group, tend to outperform growth stocks over extended periods of time. Typically, value investors perform financial analysis of numerous metrics, don’t follow the herd and are long-term investors.

AAII’s A+ Investor Value Grade is derived from a stock’s Value Score. The Value Score is the percentile rank of the average of the percentile ranks of the price-to-sales ratio, price-earnings ratio, enterprise-value-to-EBITDA (EV/EBITDA) ratio, shareholder yield, price-to-book-value ratio and price-to-free-cash-flow ratio. The score is variable, meaning it can consider all six ratios or, should any of the six ratios not be valid, the remaining ratios that are valid. To be assigned a Value Score, stocks must have a valid (non-null) ratio and corresponding ranking for at least two of the six valuation ratios.

What Goes Into AAII’s Value Grade?

Stock evaluation requires access to huge amounts of data as well as the knowledge and time to sift through it all, make sense of financial ratios, read income statements and analyze recent stock movement. AAII created A+ Investor, a robust data suite that condenses data research in an actionable and customizable way suitable for investors of all knowledge levels, to help investors with that task.

AAII’s proprietary stock grades come with A+ Investor. These offer intuitive A–F grades for more than just value. It is possible for a stock to appear cheap based on one valuation metric but appear expensive on another. It is also possible for one valuation ratio to be associated with outperforming stocks during certain periods of time but not others. Some stocks may even have null values for certain metrics like the price-earnings ratio or the price-to-book ratio but not others. An example of this would be a company with losses instead of profits or a negative book value because of heavy borrowing. Negative earnings or book value result in non-meaningful ratios that are left blank or null.

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3 Undervalued Industrial Machinery & Equipment Stocks

Of course, there are countless value stocks that are worth mentioning, but this is a concise list of the top 3 undervalued stocks in the Industrial Machinery & Equipment industry for Tuesday, January 23, 2024. Let’s take a closer look at their individual scores to see how they measure up against each other and the Industrial Machinery & Equipment industry median.

The Value Grade is assigned based on how each stock’s composite valuation compares to all other stocks.

The process for assigning grades starts with each variable for a given stock. The percentile rankings for all valid ratios that a stock has are calculated. So, for instance, a stock could have a price-to-book ranking in the 43rd percentile, a price-earnings ranking in the 67th percentile, a price-to-sales ranking in the 23rd percentile, etc. Then, those rankings are averaged for each stock. (A minimum of two valid variables are required, though all six will be used if available.)

Once the average of the individual variables is calculated, that average is ranked against all stocks. Put another way, each stock’s composite valuation is compared to all other stocks. These ranks are then sorted into quintiles from the cheapest 20% (a grade of A) to the most expensive 20% (a grade of F).

As always, we recommend that you conduct proper due diligence and research before investing in any security. We also suggest that investors utilize numerous grades, not just value, when it comes to deciding whether a company is a good fit for their allocation needs.

Chicago Rivet & Machine Co.’s Value Grade

Value Grade:

Chicago Rivet & Machine Co. operates in the fastener industry. The Company is engaged in the business of producing and selling rivets, cold-formed fasteners and parts, screw machine products, automatic rivet setting machines and parts and tools for such machines. The Company operates through two segments: fasteners and assembly equipment. The fastener segment consists of the manufacture and sale of rivets, cold-formed fasteners and parts, and screw machine products. The assembly equipment segment consists primarily of the manufacture of automatic rivet setting machines, automatic assembly equipment and parts and tools for such machines. The principal market for the Company?s products is the North American automotive industry. The Company serves various customers in the manufacture of automobiles and automotive components. The Company's wholly owned subsidiary is H & L Tool Company, Inc.

Stocks with a Value Score from 81 to 100 are considered deep value, those with a score between 61 and 80 are value and so on.

Chicago Rivet & Machine Co. has a Value Score of 95, which is considered to be undervalued.

When you look at Chicago Rivet & Machine Co.’s price-to-sales ratio at 0.50 compared to the industry median at 1.75, this company has a lower price relative to revenue compared to its peers. This could make Chicago Rivet & Machine Co.’s stock more attractive for value investors.

Shareholder yield is the sum of a stock’s dividend yield (paid over previous 12 months minus special dividends) and the percentage of net share buybacks over the previous 12 months. Chicago Rivet & Machine Co.’s shareholder yield is higher than its industry median ratio of 0.36%. Value investors may look for an attractive shareholder yield because it can be a powerful tool for identifying if the company has a good management team.

As one of the most common value metrics, the price-to-book ratio evaluates a company’s current market price relative to its book value. Chicago Rivet & Machine Co.’s price-to-book ratio is lower than its industry median ratio of 2.35. This could make Chicago Rivet & Machine Co. more attractive to investors looking for a new addition to their portfolio.

Quality Industrial Corp’s Value Grade

Value Grade:

Quality Industrial Corp. is engaged in manufacturing and assembling heavy engineering equipment and precision engineered technology for the industrial, oil and gas, and utility sectors. It is a provider of total integrated solutions to the global energy and infrastructure market. It specializes in designing, engineering, procurement, fabrication, testing, construction, manufacturing and site installation of heavy engineering equipment, process skids and modules, pipe spools and piping systems, offshore structures, and tank farms. Its types of products include pressure vessels, reactors and columns, shell and tube heat exchangers, evaporators/condensers and re-boilers/waste heat boilers, pipe spools fabrication and piping systems, process skids and modular assemblies, process and storage tanks, and heavy structures (on-shore and off-shore). Its process skids and modular assemblies include test separators, gas refrigeration modules, fuel gas conditioning skids, and filtration skids.

Stocks with a Value Score from 81 to 100 are considered deep value, those with a score between 61 and 80 are value and so on.

Quality Industrial Corp has a Value Score of 84, which is considered to be undervalued.

Quality Industrial Corp’s price-earnings ratio is 1.5 compared to the industry median at 26.1. This means that it has a lower price relative to its earnings compared to its peers. This makes Quality Industrial Corp more attractive for value investors.

Quality Industrial Corp’s price-to-book ratio is higher than its peers. This could make Quality Industrial Corp less attractive for value investors when compared to the industry median at 2.35.

You can read more about Quality Industrial Corp’s key financial metrics like shareholder yield, price-to-free-cash-flow and EV/EBITDA ratio, or learn more about its Momentum and Growth Grades, by subscribing to A+ Investor.

Sarcos Technology and Robotics Corp’s Value Grade

Value Grade:

Sarcos Technology and Robotics Corporation designs, developments and manufactures robotic systems and solutions that redefine human possibilities. Its robotic systems are designed to augment and increase human productivity by combining human intelligence, instinct and judgment with the strength, endurance and precision of machines. Its core systems include Guardian XM, Guardian XT and Guardian Sea Class teleoperated/semi-autonomous systems and the Guardian XO exoskeleton. Its teleoperated/semi-autonomous systems include mobile robotic arms, sensing, wireless communications, control stations with intuitive human-robot interfaces and application-specific end-of-arm attachments, such as grippers, drills. The Guardian XM system is an intelligent robotic manipulator that offers speed, dexterity, precision and strength in a compact, lightweight package. The Guardian Sea Class robotic system is designed to provide human-like manipulation capability in complex underwater environments.

Stocks with a Value Score from 81 to 100 are considered deep value, those with a score between 61 and 80 are value and so on.

Sarcos Technology and Robotics Corp has a Value Score of 88, which is considered to be undervalued.

Sarcos Technology and Robotics Corp’s price-to-book ratio is higher than its peers. This could make Sarcos Technology and Robotics Corp less attractive for value investors when compared to the industry median at 2.35.

You can read more about Sarcos Technology and Robotics Corp’s key financial metrics like shareholder yield, price-to-free-cash-flow and EV/EBITDA ratio, or learn more about its Momentum and Growth Grades, by subscribing to A+ Investor.

Other Industrial Machinery & Equipment Stock Grades

Value is just one of the five Stock Grades included in our A+ Investor service. AAII members can see the top-graded stocks—those with grades of A or B for value, growth, momentum, earnings estimate revisions and quality—on the A+ Stock Grades Screener.

Also, if you want full access to all of AAII’s premium services, you can subscribe to one convenient bundled plan called AAII Platinum where you can try out A+ Investor, AAII Dividend Investing, the Stock Superstars Report, Growth Investing and VMQ Stocks. With the other premium services, you can dive deep into additional metrics, portfolios, commentary and information about Industrial Machinery & Equipment stocks as well as other industrys.

Choosing Which of the 3 Best Industrial Machinery & Equipment Stocks Is Right for You

Choosing which value stocks to invest in will ultimately depend on your individual goals and allocation; however, comparing similar value stocks in the same industry can help you analyze which might be better investments for you in the long run. So, let’s take a look at the Value Grade for all of our stocks.

• Chicago Rivet & Machine Co. stock has a Value Grade of A.
• Quality Industrial Corp stock has a Value Grade of A.
• Sarcos Technology and Robotics Corp stock has a Value Grade of A.

Now that you have a bit more background about each of the 3 undervalued stocks in the Industrial Machinery & Equipment industry as well as their overall grades, it’s time for you to conduct additional research to see if these could fit your portfolio needs based on your goals and risk tolerance. AAII can help you figure out both and identify which investments align with what works best for you.

We do so through a program of education that teaches you to invest for yourself and become an effective manager of your own wealth—no more relying on others for your financial independence. You can rely on AAII for timeless articles on financial planning and stock-picking, unbiased research and actionable analysis that makes you a better investor.

A+ Investor adds to that qualitative teaching by giving you a powerful data suite that helps you whittle down investment decisions to find stocks, exchange-traded funds (ETFs) or mutual funds that meet your needs.

Additional Resources About Industrial Machinery & Equipment Stocks

Want to learn more about Industrial Machinery & Equipment stocks to see if they could be the right investment for you? Check out some additional resources and articles to help you on your financial journey.

• 3 Undervalued Industrial Machinery & Equipment Stocks for Tuesday, January 23
• What You Need to Know About Albany International Corp.'s Q3 Earnings
• What You Need to Know About Alta Equipment Group Inc's Q3 Earnings
• What You Need to Know About Applied Industrial Technologies Inc's Q1 Earnings

AAII Disclaimer

We make no representations or warranties that any investor will, or is likely to, achieve profits similar to those shown, because past, hypothetical or simulated performance is not necessarily indicative of future results. Before making an investment decision, you should consider your circumstances and whether the information on our content is applicable to your situation. This information was prepared in good faith and we accept no liability for any errors or omissions. The full disclaimer can be read here.