AFI vs. RYN: Which Stock Is the Better Value Option?
Investors interested in Building Products - Wood stocks are likely familiar with Armstrong Flooring (AFI) and Rayonier (RYN). 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.
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.
Armstrong Flooring has a Zacks Rank of #2 (Buy), while Rayonier has a Zacks Rank of #3 (Hold) right now. The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that AFI has an improving earnings outlook. But this is just one piece of the puzzle for value investors.
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 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.
AFI currently has a forward P/E ratio of 25.12, while RYN has a forward P/E of 44.36. We also note that AFI has a PEG ratio of 1.89. This figure is similar to the commonly-used P/E ratio, with the PEG ratio also factoring in a company's expected earnings growth rate. RYN currently has a PEG ratio of 8.87.
Another notable valuation metric for AFI is its P/B ratio of 0.61. 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, RYN has a P/B of 2.21.
Based on these metrics and many more, AFI holds a Value grade of B, while RYN has a Value grade of D.
AFI has seen stronger estimate revision activity and sports more attractive valuation metrics than RYN, so it seems like value investors will conclude that AFI is the superior option right now.
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