Investors looking for stocks in the Building Products - Miscellaneous sector might want to consider either TopBuild (BLD) or Simpson Manufacturing (SSD). But which of these two stocks presents investors with the better value opportunity right now? Let's 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 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.
TopBuild has a Zacks Rank of #2 (Buy), while Simpson Manufacturing has a Zacks Rank of #5 (Strong Sell) right now. Investors should feel comfortable knowing that BLD likely has seen a stronger improvement to its earnings outlook than SSD has recently. But this is just one piece of the puzzle 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.
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.
BLD currently has a forward P/E ratio of 17.42, while SSD has a forward P/E of 22.87. We also note that BLD has a PEG ratio of 0.62. 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. SSD currently has a PEG ratio of 4.57.
Another notable valuation metric for BLD is its P/B ratio of 2.73. Investors use the P/B ratio to look at a stock's market value versus its book value, which is defined as total assets minus total liabilities. By comparison, SSD has a P/B of 3.22.
These are just a few of the metrics contributing to BLD's Value grade of A and SSD's Value grade of F.
BLD sticks out from SSD in both our Zacks Rank and Style Scores models, so value investors will likely feel that BLD is the better option right now.
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TopBuild Corp. (BLD) : Free Stock Analysis Report
Simpson Manufacturing Company, Inc. (SSD) : Free Stock Analysis Report
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