Investors interested in stocks from the Building Products - Concrete and Aggregates sector have probably already heard of Cemex (CX) and Vulcan Materials (VMC). But which of these two companies is the best option for those looking for undervalued stocks? Let's take a closer look.
Everyone has their own methods for finding great value opportunities, but our model includes pairing an impressive grade in the Value category of our Style Scores system with a strong Zacks Rank. The proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
Currently, Cemex has a Zacks Rank of #2 (Buy), while Vulcan Materials has a Zacks Rank of #4 (Sell). Investors should feel comfortable knowing that CX likely has seen a stronger improvement to its earnings outlook than VMC has recently. But this is just one piece of the puzzle for value investors.
Value investors also tend to look at a number of traditional, tried-and-true figures to help them find stocks 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.
CX currently has a forward P/E ratio of 16.96, while VMC has a forward P/E of 32.94. We also note that CX has a PEG ratio of 0.40. 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. VMC currently has a PEG ratio of 2.91.
Another notable valuation metric for CX is its P/B ratio of 1.11. 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, VMC has a P/B of 3.58.
These metrics, and several others, help CX earn a Value grade of A, while VMC has been given a Value grade of C.
CX 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 CX is likely the superior value option right now.
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Cemex S.A.B. de C.V. (CX) : Free Stock Analysis Report
Vulcan Materials Company (VMC) : Free Stock Analysis Report
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