Investors interested in stocks from the Building Products - Retail sector have probably already heard of Beacon Roofing Supply (BECN) and Fastenal (FAST). But which of these two stocks presents investors with the better value opportunity right now? 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 emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.
Beacon Roofing Supply and Fastenal are both sporting a Zacks Rank of # 2 (Buy) right now. This means that both companies have witnessed positive earnings estimate revisions, so investors should feel comfortable knowing that both of these stocks have an improving earnings outlook. But this is just one factor that value investors are interested in.
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.
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.
BECN currently has a forward P/E ratio of 11.07, while FAST has a forward P/E of 21.94. We also note that BECN has a PEG ratio of 0.53. 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. FAST currently has a PEG ratio of 1.37.
Another notable valuation metric for BECN is its P/B ratio of 1.26. 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, FAST has a P/B of 7.73.
Based on these metrics and many more, BECN holds a Value grade of B, while FAST has a Value grade of C.
Both BECN and FAST are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that BECN is the superior value option right now.
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Beacon Roofing Supply, Inc. (BECN) : Free Stock Analysis Report
Fastenal Company (FAST) : Free Stock Analysis Report
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