Investors interested in Building Products - Miscellaneous stocks are likely familiar with Arcosa (ACA) and Continental Building Products (CBPX). But which of these two companies is the best option for those looking for undervalued stocks? Let's 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.
Currently, Arcosa has a Zacks Rank of #2 (Buy), while Continental Building Products has a Zacks Rank of #3 (Hold). The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that ACA has an improving earnings outlook. But this is just one factor that value investors are interested in.
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 highlights undervalued companies by looking at a variety of key metrics, including the popular P/E ratio, as well as the P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that have been used by value investors for years.
ACA currently has a forward P/E ratio of 19, while CBPX has a forward P/E of 21.67. We also note that ACA has a PEG ratio of 1.56. 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. CBPX currently has a PEG ratio of 4.33.
Another notable valuation metric for ACA is its P/B ratio of 1.19. 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, CBPX has a P/B of 3.61.
These metrics, and several others, help ACA earn a Value grade of A, while CBPX has been given a Value grade of C.
ACA has seen stronger estimate revision activity and sports more attractive valuation metrics than CBPX, so it seems like value investors will conclude that ACA is the superior option right now.
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Arcosa, Inc. (ACA) : Free Stock Analysis Report
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