Investors with an interest in Building Products - Wood stocks have likely encountered both Universal Forest Products (UFPI) and Potlatch (PCH). But which of these two stocks offers value investors a better bang for their buck right now? We'll need to 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 proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.
Universal Forest Products has a Zacks Rank of #2 (Buy), while Potlatch has a Zacks Rank of #4 (Sell) right now. This means that UFPI's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. But this is just one factor that value investors are interested in.
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.
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.
UFPI currently has a forward P/E ratio of 14.06, while PCH has a forward P/E of 49.11. We also note that UFPI has a PEG ratio of 2.81. 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. PCH currently has a PEG ratio of 9.82.
Another notable valuation metric for UFPI is its P/B ratio of 2.08. 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, PCH has a P/B of 2.25.
These are just a few of the metrics contributing to UFPI's Value grade of A and PCH's Value grade of D.
UFPI 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 UFPI is likely the superior value option right now.
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Universal Forest Products, Inc. (UFPI) : Free Stock Analysis Report
Potlatch Corporation (PCH) : Free Stock Analysis Report
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