Investors interested in Building Products - Heavy Construction stocks are likely familiar with Primoris Services (PRIM) and Dycom Industries (DY). 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 is a proven strategy that targets companies with positive earnings estimate revision trends, while our Style Scores work to grade companies based on specific traits.
Primoris Services has a Zacks Rank of #2 (Buy), while Dycom Industries has a Zacks Rank of #3 (Hold) right now. This means that PRIM's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. But this is only part of the picture 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 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.
PRIM currently has a forward P/E ratio of 11.25, while DY has a forward P/E of 21.25. We also note that PRIM has a PEG ratio of 1.13. 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. DY currently has a PEG ratio of 2.83.
Another notable valuation metric for PRIM is its P/B ratio of 1.59. Investors use the P/B ratio to look at a stock's market value versus its book value, which is defined as total assets minus total liabilities. By comparison, DY has a P/B of 2.09.
These are just a few of the metrics contributing to PRIM's Value grade of B and DY's Value grade of C.
PRIM 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 PRIM is likely the superior value option right now.
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