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 offers value investors a better bang for their buck right now? We'll need to 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 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.
Currently, Boise Cascade has a Zacks Rank of #1 (Strong Buy), while Weyerhaeuser 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 BCC 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.
BCC currently has a forward P/E ratio of 14.96, while WY has a forward P/E of 39.85. We also note that BCC 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. WY currently has a PEG ratio of 7.97.
Another notable valuation metric for BCC is its P/B ratio of 1.57. 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 2.11.
These metrics, and several others, help BCC earn a Value grade of A, while WY has been given a Value grade of D.
BCC 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 BCC is likely 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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