U.S. Markets open in 4 hrs 46 mins

HDS vs. GWW: Which Stock Should Value Investors Buy Now?

In the latest trading session, Walt Disney (DIS) closed at $139.10, marking a -0.81% move from the previous day.

Investors looking for stocks in the Industrial Services sector might want to consider either HD Supply (HDS) or W.W. Grainger (GWW). 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.

Currently, HD Supply has a Zacks Rank of #2 (Buy), while W.W. Grainger 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 just one factor that value investors are interested in.

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.

HDS currently has a forward P/E ratio of 11.86, while GWW has a forward P/E of 19.09. We also note that HDS has a PEG ratio of 0.86. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. GWW currently has a PEG ratio of 1.54.

Another notable valuation metric for HDS is its P/B ratio of 4.49. 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, GWW has a P/B of 8.35.

Based on these metrics and many more, HDS holds a Value grade of A, while GWW has a Value grade of C.

HDS has seen stronger estimate revision activity and sports more attractive valuation metrics than GWW, so it seems like value investors will conclude that HDS is the superior option right now.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
HD Supply Holdings, Inc. (HDS) : Free Stock Analysis Report
W.W. Grainger, Inc. (GWW) : Free Stock Analysis Report
To read this article on Zacks.com click here.