Investors interested in Building Products - Miscellaneous stocks are likely familiar with Arcosa (ACA) and Simpson Manufacturing (SSD). But which of these two stocks offers value investors a better bang for their buck right now? We'll need to 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 favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.
Arcosa and Simpson Manufacturing are sporting Zacks Ranks of #1 (Strong Buy) and #4 (Sell), respectively, right now. This means that ACA's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. But this is just one piece of the puzzle for value investors.
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 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.
ACA currently has a forward P/E ratio of 17.55, while SSD has a forward P/E of 21.26. We also note that ACA has a PEG ratio of 1.39. This figure is similar to the commonly-used P/E ratio, with the PEG ratio also factoring in a company's expected earnings growth rate. SSD currently has a PEG ratio of 4.25.
Another notable valuation metric for ACA is its P/B ratio of 1.02. 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, SSD has a P/B of 3.60.
These are just a few of the metrics contributing to ACA's Value grade of A and SSD's Value grade of D.
ACA sticks out from SSD in both our Zacks Rank and Style Scores models, so value investors will likely feel that ACA is the better option right now.
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Arcosa, Inc. (ACA) : Free Stock Analysis Report
Simpson Manufacturing Company, Inc. (SSD) : Free Stock Analysis Report
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