Investors interested in Industrial Services stocks are likely familiar with HD Supply (HDS) and DMC Global (BOOM). 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.
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 emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.
Right now, HD Supply is sporting a Zacks Rank of #2 (Buy), while DMC Global has a Zacks Rank of #3 (Hold). The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that HDS has an improving earnings outlook. 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 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.
HDS currently has a forward P/E ratio of 12.82, while BOOM has a forward P/E of 20.43. We also note that HDS has a PEG ratio of 0.81. 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. BOOM currently has a PEG ratio of 1.02.
Another notable valuation metric for HDS is its P/B ratio of 4.84. 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, BOOM has a P/B of 5.14.
These metrics, and several others, help HDS earn a Value grade of B, while BOOM has been given a Value grade of C.
HDS has seen stronger estimate revision activity and sports more attractive valuation metrics than BOOM, so it seems like value investors will conclude that HDS is the superior option right now.
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HD Supply Holdings, Inc. (HDS) : Free Stock Analysis Report
DMC Global Inc. (BOOM) : Free Stock Analysis Report
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