Investors interested in stocks from the Building Products - Wood sector have probably already heard of Boise Cascade (BCC) and Weyerhaeuser (WY). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.
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 is a proven strategy that targets companies with positive earnings estimate revision trends, while our Style Scores work to grade companies based on specific traits.
Boise Cascade and Weyerhaeuser are sporting Zacks Ranks of #1 (Strong Buy) and #3 (Hold), respectively, right now. The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that BCC 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.
BCC currently has a forward P/E ratio of 16.43, while WY has a forward P/E of 48.09. We also note that BCC has a PEG ratio of 2.08. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. WY currently has a PEG ratio of 9.62.
Another notable valuation metric for BCC is its P/B ratio of 1.73. 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, WY has a P/B of 2.33.
These are just a few of the metrics contributing to BCC's Value grade of A and WY's Value grade of D.
BCC stands above WY thanks to its solid earnings outlook, and based on these valuation figures, we also feel that BCC is the superior value option right now.
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Boise Cascade, L.L.C. (BCC) : Free Stock Analysis Report
Weyerhaeuser Company (WY) : Free Stock Analysis Report
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