AZEK vs. WSO: Which Stock Is the Better Value Option?
Investors interested in Building Products - Air Conditioner and Heating stocks are likely familiar with The AZEK Company (AZEK) and Watsco (WSO). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.
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.
Right now, The AZEK Company is sporting a Zacks Rank of #2 (Buy), while Watsco has a Zacks Rank of #3 (Hold). The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that AZEK has an improving earnings outlook. But this is just one piece of the puzzle for value investors.
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.
AZEK currently has a forward P/E ratio of 26.81, while WSO has a forward P/E of 27.62. We also note that AZEK has a PEG ratio of 3.13. 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. WSO currently has a PEG ratio of 4.99.
Another notable valuation metric for AZEK is its P/B ratio of 3.05. The P/B is a method of comparing a stock's market value to its book value, which is defined as total assets minus total liabilities. By comparison, WSO has a P/B of 6.16.
Based on these metrics and many more, AZEK holds a Value grade of B, while WSO has a Value grade of C.
AZEK 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 AZEK is likely the superior value option right now.
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The AZEK Company Inc. (AZEK) : Free Stock Analysis Report
Watsco, Inc. (WSO) : Free Stock Analysis Report
