Investors interested in stocks from the Building Products - Miscellaneous sector have probably already heard of Patrick Industries (PATK) and PGT (PGTI). But which of these two stocks presents investors with the better value opportunity right now? Let's take a closer look.
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 Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.
Patrick Industries and PGT are both sporting a Zacks Rank of # 1 (Strong Buy) right now. This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that these stocks have improving earnings outlooks. But this is just one factor that value investors are interested in.
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.
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 13.41, while PGTI has a forward P/E of 22.02. We also note that PATK has a PEG ratio of 1.05. This popular figure is similar to the widely-used P/E ratio, but the PEG ratio also considers a company's expected EPS growth rate. PGTI currently has a PEG ratio of 1.14.
Another notable valuation metric for PATK is its P/B ratio of 3.69. 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, PGTI has a P/B of 5.61.
These metrics, and several others, help PATK earn a Value grade of B, while PGTI has been given a Value grade of C.
Both PATK and PGTI are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that PATK is the superior value option right now.
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