Investors looking for stocks in the Building Products - Miscellaneous sector might want to consider either Arcosa (ACA) or 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 proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
Arcosa has a Zacks Rank of #2 (Buy), while Simpson Manufacturing has a Zacks Rank of #5 (Strong 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 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.
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 17.95, while SSD has a forward P/E of 18.47. We also note that ACA has a PEG ratio of 1.37. 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 3.69.
Another notable valuation metric for ACA is its P/B ratio of 0.96. 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 3.22.
These metrics, and several others, help ACA earn a Value grade of A, while SSD has been given a Value grade of F.
ACA is currently sporting an improving earnings outlook, which makes it stick out in our Zacks Rank model. And, based on the above valuation metrics, we feel that ACA is likely the superior value option right now.
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Arcosa, Inc. (ACA) : Free Stock Analysis Report
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