Investors interested in Building Products - Wood stocks are likely familiar with Louisiana-Pacific (LPX) and Weyerhaeuser (WY). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.
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 proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.
Louisiana-Pacific and Weyerhaeuser are both sporting a Zacks Rank of # 2 (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 piece of the puzzle for value investors.
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.
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.
LPX currently has a forward P/E ratio of 9.49, while WY has a forward P/E of 24.78. We also note that LPX has a PEG ratio of 1.90. 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. WY currently has a PEG ratio of 4.96.
Another notable valuation metric for LPX is its P/B ratio of 2.42. 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, WY has a P/B of 3.14.
These are just a few of the metrics contributing to LPX's Value grade of A and WY's Value grade of D.
Both LPX and WY are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that LPX is the superior value option right now.
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Louisiana-Pacific Corporation (LPX) : Free Stock Analysis Report
Weyerhaeuser Company (WY) : Free Stock Analysis Report
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