Investors with an interest in Building Products - Retail stocks have likely encountered both Beacon Roofing Supply (BECN) and Fastenal (FAST). 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 favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.
Right now, both Beacon Roofing Supply and Fastenal are sporting a Zacks Rank of # 2 (Buy). This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that these stocks have improving earnings outlooks. But this is only part of the picture 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.
Our Value category grades stocks based on a number of key metrics, including the tried-and-true P/E ratio, the P/S ratio, earnings yield, and cash flow per share, as well as a variety of other fundamentals that value investors frequently use.
BECN currently has a forward P/E ratio of 11.72, while FAST has a forward P/E of 21.97. We also note that BECN has a PEG ratio of 0.56. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock'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 1.34. 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 7.71.
These metrics, and several others, help BECN earn a Value grade of B, while FAST has been given 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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