Investors with an interest in Building Products - Miscellaneous stocks have likely encountered both NCI Building Systems (NCS) and Simpson Manufacturing (SSD). But which of these two companies is the best option for those looking for undervalued stocks? 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 proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
NCI Building Systems and Simpson Manufacturing are both sporting a Zacks Rank of # 2 (Buy) right now. The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that both of these companies have improving earnings outlooks. However, value investors will care about much more than just this.
Value investors also try to analyze a wide range of traditional figures and metrics to help determine whether a company is undervalued at its 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.
NCS currently has a forward P/E ratio of 11.63, while SSD has a forward P/E of 25.32. We also note that NCS has a PEG ratio of 1.16. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. SSD currently has a PEG ratio of 5.06.
Another notable valuation metric for NCS is its P/B ratio of 3.74. 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, SSD has a P/B of 3.97.
Based on these metrics and many more, NCS holds a Value grade of B, while SSD has a Value grade of D.
Both NCS and SSD are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that NCS is the superior value option right now.
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NCI Building Systems, Inc. (NCS) : Free Stock Analysis Report
Simpson Manufacturing Company, Inc. (SSD) : Free Stock Analysis Report
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