Investors with an interest in Industrial Services stocks have likely encountered both Ashtead Group PLC (ASHTY) and W.W. Grainger (GWW). But which of these two companies is the best option for those looking for undervalued stocks? Let's take a closer look.
The best way to find great value stocks is to pair a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system. The proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
Currently, both Ashtead Group PLC and W.W. Grainger are holding a Zacks Rank of # 1 (Strong Buy). This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that these stocks have improving earnings outlooks. However, value investors will care about much more than just this.
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.
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.
ASHTY currently has a forward P/E ratio of 14.31, while GWW has a forward P/E of 21.03. We also note that ASHTY has a PEG ratio of 0.95. 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. GWW currently has a PEG ratio of 1.74.
Another notable valuation metric for ASHTY is its P/B ratio of 4.80. The P/B ratio is used to compare a stock's market value with its book value, which is defined as total assets minus total liabilities. For comparison, GWW has a P/B of 9.15.
These metrics, and several others, help ASHTY earn a Value grade of B, while GWW has been given a Value grade of C.
Both ASHTY and GWW are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that ASHTY is the superior value option right now.
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Ashtead Group PLC (ASHTY) : Free Stock Analysis Report
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