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OC or ROAD: Which Is the Better Value Stock Right Now?

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·2 min read
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Investors looking for stocks in the Building Products - Miscellaneous sector might want to consider either Owens Corning (OC) or Construction Partners (ROAD). But which of these two stocks offers value investors a better bang for their buck right now? We'll need to take a closer look.

The best way to find great value stocks is to pair a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system. The Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.

Owens Corning and Construction Partners are sporting Zacks Ranks of #1 (Strong Buy) and #2 (Buy), respectively, right now. This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that OC is likely seeing its earnings outlook improve to a greater extent. However, value investors will care about much more than just this.

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 highlights undervalued companies by looking at a variety of key metrics, including the popular P/E ratio, as well as the P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that have been used by value investors for years.

OC currently has a forward P/E ratio of 13.23, while ROAD has a forward P/E of 35.23. We also note that OC has a PEG ratio of 0.94. This figure is similar to the commonly-used P/E ratio, with the PEG ratio also factoring in a company's expected earnings growth rate. ROAD currently has a PEG ratio of 2.11.

Another notable valuation metric for OC is its P/B ratio of 2.75. 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, ROAD has a P/B of 4.27.

These are just a few of the metrics contributing to OC's Value grade of B and ROAD's Value grade of D.

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


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