Investors looking for stocks in the Industrial Services sector might want to consider either HD Supply (HDS) or DMC Global (BOOM). But which of these two stocks presents investors with the better value opportunity right now? Let's take a closer look.
We have found that the best way to discover great value opportunities is to pair a strong Zacks Rank with a great 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.
HD Supply has a Zacks Rank of #2 (Buy), while DMC Global has a Zacks Rank of #5 (Strong Sell) right now. This means that HDS's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. But this is just one piece of the puzzle for value investors.
Value investors analyze a variety of traditional, tried-and-true metrics to help find companies that they believe are undervalued at their 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.
HDS currently has a forward P/E ratio of 13.26, while BOOM has a forward P/E of 22.18. We also note that HDS has a PEG ratio of 0.85. 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 1.11.
Another notable valuation metric for HDS is its P/B ratio of 5.37. 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, BOOM has a P/B of 5.44.
These are just a few of the metrics contributing to HDS's Value grade of B and BOOM's Value grade of D.
HDS 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 HDS is likely the superior value 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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