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.
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 proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.
Boise Cascade and Weyerhaeuser are sporting Zacks Ranks of #1 (Strong Buy) and #3 (Hold), respectively, right now. This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that BCC is likely seeing its earnings outlook improve to a greater extent. But this is only part of the picture for value investors.
Value investors are also interested in a number of tried-and-true valuation metrics that help show when 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 18.68, while WY has a forward P/E of 61.62. We also note that BCC has a PEG ratio of 2.36. 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 12.32.
Another notable valuation metric for BCC is its P/B ratio of 1.98. 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, WY has a P/B of 2.53.
Based on these metrics and many more, BCC holds a Value grade of A, while WY has a 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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