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 companies is the best option for those looking for undervalued stocks? Let's take a closer look.
Everyone has their own methods for finding great value opportunities, but our model includes pairing an impressive grade in the Value category of our Style Scores system with a strong Zacks Rank. The Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.
Arcosa has a Zacks Rank of #1 (Strong Buy), while Simpson Manufacturing has a Zacks Rank of #4 (Sell) right now. Investors should feel comfortable knowing that ACA likely has seen a stronger improvement to its earnings outlook than SSD has recently. But this is just one factor that value investors are interested in.
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 Style Score Value grade factors in a variety of key fundamental metrics, including the popular P/E ratio, P/S ratio, earnings yield, cash flow per share, and a number of other key stats that are commonly used by value investors.
ACA currently has a forward P/E ratio of 16.74, while SSD has a forward P/E of 19.54. We also note that ACA has a PEG ratio of 1.33. 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 3.91.
Another notable valuation metric for ACA is its P/B ratio of 0.97. 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, SSD has a P/B of 3.31.
Based on these metrics and many more, ACA holds a Value grade of A, while SSD has a 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
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