Investors interested in Building Products - Miscellaneous stocks are likely familiar with Aegion (AEGN) 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.
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.
Aegion and Simpson Manufacturing are sporting Zacks Ranks of #2 (Buy) and #5 (Strong Sell), respectively, right now. The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that AEGN has an improving earnings outlook. But this is only part of the picture for value investors.
Value investors analyze a variety of traditional, tried-and-true metrics to help find companies that they believe are undervalued at their current share price levels.
The Value category of the Style Scores system identifies undervalued companies by looking at a number of key metrics. These include the long-favored P/E ratio, P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that help us determine a company's fair value.
AEGN currently has a forward P/E ratio of 15.70, while SSD has a forward P/E of 22.59. We also note that AEGN has a PEG ratio of 1.57. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. SSD currently has a PEG ratio of 4.52.
Another notable valuation metric for AEGN is its P/B ratio of 1.39. 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 3.18.
Based on these metrics and many more, AEGN holds a Value grade of A, while SSD has a Value grade of F.
AEGN 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 AEGN is likely the superior value option right now.
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Aegion Corporation (AEGN) : Free Stock Analysis Report
Simpson Manufacturing Company, Inc. (SSD) : Free Stock Analysis Report
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