Investors interested in stocks from the Building Products - Miscellaneous sector have probably already heard of 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 proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
Currently, Arcosa has a Zacks Rank of #2 (Buy), while Simpson Manufacturing 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 ACA is likely seeing its earnings outlook improve to a greater extent. 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.
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 17.63, while SSD has a forward P/E of 20.48. We also note that ACA has a PEG ratio of 1.40. 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. SSD currently has a PEG ratio of 4.10.
Another notable valuation metric for ACA is its P/B ratio of 1.04. 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, SSD has a P/B of 3.47.
These metrics, and several others, help ACA earn a Value grade of A, while SSD has been given a Value grade of C.
ACA stands above SSD thanks to its solid earnings outlook, and based on these valuation figures, we also feel that ACA is the superior value option right now.
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Arcosa, Inc. (ACA) : Free Stock Analysis Report
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