Investors interested in Building Products - Wood stocks are likely familiar with Universal Forest Products (UFPI) and Louisiana-Pacific (LPX). But which of these two companies is the best option for those looking for undervalued stocks? Let's 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 proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
Right now, Universal Forest Products is sporting a Zacks Rank of #2 (Buy), while Louisiana-Pacific has a Zacks Rank of #3 (Hold). Investors should feel comfortable knowing that UFPI likely has seen a stronger improvement to its earnings outlook than LPX has recently. However, value investors will care about much more than just this.
Value investors analyze a variety of traditional, tried-and-true metrics to help find companies that they believe are undervalued at their current share price levels.
The Style Score Value grade factors in a variety of key fundamental metrics, including the popular P/E ratio, P/S ratio, earnings yield, cash flow per share, and a number of other key stats that are commonly used by value investors.
UFPI currently has a forward P/E ratio of 14.61, while LPX has a forward P/E of 22.77. We also note that UFPI has a PEG ratio of 2.92. 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. LPX currently has a PEG ratio of 4.55.
Another notable valuation metric for UFPI is its P/B ratio of 2.16. 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, LPX has a P/B of 2.58.
These are just a few of the metrics contributing to UFPI's Value grade of A and LPX's Value grade of C.
UFPI sticks out from LPX in both our Zacks Rank and Style Scores models, so value investors will likely feel that UFPI is the better option right now.
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Universal Forest Products, Inc. (UFPI) : Free Stock Analysis Report
Louisiana-Pacific Corporation (LPX) : Free Stock Analysis Report
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