U.S. Markets close in 5 hrs 33 mins

UFPI vs. WY: Which Stock Is the Better Value Option?

Zacks Equity Research

Investors looking for stocks in the Building Products - Wood sector might want to consider either Universal Forest Products (UFPI) or Weyerhaeuser (WY). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.

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.

Currently, Universal Forest Products has a Zacks Rank of #2 (Buy), while Weyerhaeuser has a Zacks Rank of #3 (Hold). The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that UFPI has an improving earnings outlook. But this is just one piece of the puzzle 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.

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 11.93, while WY has a forward P/E of 34.72. We also note that UFPI has a PEG ratio of 2.39. 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. WY currently has a PEG ratio of 6.94.

Another notable valuation metric for UFPI is its P/B ratio of 1.79. 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, WY has a P/B of 1.91.

These metrics, and several others, help UFPI earn a Value grade of B, while WY has been given a Value grade of D.

UFPI sticks out from WY in both our Zacks Rank and Style Scores models, so value investors will likely feel that UFPI is the better option right now.


Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
 
Universal Forest Products, Inc. (UFPI) : Free Stock Analysis Report
 
Weyerhaeuser Company (WY) : Free Stock Analysis Report
 
To read this article on Zacks.com click here.