LL or FAST: Which Is the Better Value Stock Right Now?
Investors interested in stocks from the Building Products - Retail sector have probably already heard of Lumber Liquidators Holdings (LL) and Fastenal (FAST). 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 proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.
Currently, Lumber Liquidators Holdings has a Zacks Rank of #2 (Buy), while Fastenal 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 LL has an improving earnings outlook. However, value investors will care about much more than just this.
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.
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.
LL currently has a forward P/E ratio of 18.92, while FAST has a forward P/E of 34.05. We also note that LL has a PEG ratio of 0.84. 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. FAST currently has a PEG ratio of 3.78.
Another notable valuation metric for LL is its P/B ratio of 2.91. 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, FAST has a P/B of 10.90.
These metrics, and several others, help LL earn a Value grade of A, while FAST has been given a Value grade of D.
LL has seen stronger estimate revision activity and sports more attractive valuation metrics than FAST, so it seems like value investors will conclude that LL is the superior option right now.
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Lumber Liquidators Holdings, Inc (LL) : Free Stock Analysis Report
Fastenal Company (FAST) : Free Stock Analysis Report
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