IBP or WMS: Which Is the Better Value Stock Right Now?
Investors interested in Building Products - Miscellaneous stocks are likely familiar with Installed Building Products (IBP) and Advanced Drainage Systems (WMS). 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 Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.
Both Installed Building Products and Advanced Drainage Systems have a Zacks Rank of # 1 (Strong Buy) right now. Investors should feel comfortable knowing that both of these stocks have an improving earnings outlook since the Zacks Rank favors companies that have witnessed positive analyst estimate revisions. But this is just one factor that value investors are interested in.
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.
IBP currently has a forward P/E ratio of 12.69, while WMS has a forward P/E of 21.78. We also note that IBP has a PEG ratio of 1.59. This popular figure is similar to the widely-used P/E ratio, but the PEG ratio also considers a company's expected EPS growth rate. WMS currently has a PEG ratio of 1.91.
Another notable valuation metric for IBP is its P/B ratio of 6.25. 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, WMS has a P/B of 10.07.
These are just a few of the metrics contributing to IBP's Value grade of A and WMS's Value grade of C.
Both IBP and WMS are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that IBP is the superior value option right now.
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Installed Building Products, Inc. (IBP) : Free Stock Analysis Report
Advanced Drainage Systems, Inc. (WMS) : Free Stock Analysis Report
