GMS or LL: Which Is the Better Value Stock Right Now?
Investors with an interest in Building Products - Retail stocks have likely encountered both GMS Inc. (GMS) and Lumber Liquidators Holdings (LL). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.
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 Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.
Currently, GMS Inc. has a Zacks Rank of #1 (Strong Buy), while Lumber Liquidators Holdings has a Zacks Rank of #4 (Sell). This means that GMS's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. But this is only part of the picture 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 Style Score Value grade factors in a variety of key fundamental metrics, including the popular P/E ratio, P/S ratio, earnings yield, cash flow per share, and a number of other key stats that are commonly used by value investors.
GMS currently has a forward P/E ratio of 8.17, while LL has a forward P/E of 33.65. We also note that GMS has a PEG ratio of 1.17. 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. LL currently has a PEG ratio of 1.42.
Another notable valuation metric for GMS is its P/B ratio of 1.88. 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, LL has a P/B of 3.82.
These metrics, and several others, help GMS earn a Value grade of A, while LL has been given a Value grade of D.
GMS sticks out from LL in both our Zacks Rank and Style Scores models, so value investors will likely feel that GMS is the better option right now.
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GMS Inc. (GMS) : Free Stock Analysis Report
Lumber Liquidators Holdings, Inc (LL) : Free Stock Analysis Report
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