Investors interested in Building Products - Miscellaneous stocks are likely familiar with Patrick Industries (PATK) and Masco (MAS). But which of these two stocks presents investors with the better value opportunity right now? 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 Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.
Currently, Patrick Industries has a Zacks Rank of #2 (Buy), while Masco has a Zacks Rank of #4 (Sell). The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that PATK has an improving earnings outlook. But this is just one piece of the puzzle for value investors.
Value investors are also interested in a number of tried-and-true valuation metrics that help show when a company is undervalued at its 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.
PATK currently has a forward P/E ratio of 11.56, while MAS has a forward P/E of 14.89. We also note that PATK has a PEG ratio of 1.03. 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. MAS currently has a PEG ratio of 1.44.
Another notable valuation metric for PATK is its P/B ratio of 3.24. 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, MAS has a P/B of 177.28.
Based on these metrics and many more, PATK holds a Value grade of A, while MAS has a Value grade of C.
PATK is currently sporting an improving earnings outlook, which makes it stick out in our Zacks Rank model. And, based on the above valuation metrics, we feel that PATK is likely the superior value option right now.
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