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PATK vs. GCP: Which Stock Is the Better Value Option?

Zacks Equity Research
Texas Capital (TCBI) reported earnings 30 days ago. What's next for the stock? We take a look at earnings estimates for some clues.

Investors with an interest in Building Products - Miscellaneous stocks have likely encountered both Patrick Industries (PATK) and GCP Applied Technologies (GCP). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.

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 proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.

Right now, Patrick Industries is sporting a Zacks Rank of #1 (Strong Buy), while GCP Applied Technologies has a Zacks Rank of #5 (Strong Sell). This means that PATK's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. However, value investors will care about much more than just this.

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 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.

PATK currently has a forward P/E ratio of 13.49, while GCP has a forward P/E of 27.93. We also note that PATK has a PEG ratio of 0.91. 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. GCP currently has a PEG ratio of 1.55.

Another notable valuation metric for PATK is its P/B ratio of 3.89. The P/B ratio is used to compare a stock's market value with its book value, which is defined as total assets minus total liabilities. For comparison, GCP has a P/B of 4.22.

Based on these metrics and many more, PATK holds a Value grade of B, while GCP has a Value grade of F.

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


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