Investors with an interest in Building Products - Miscellaneous stocks have likely encountered both United Rentals (URI) and Simpson Manufacturing (SSD). But which of these two companies is the best option for those looking for undervalued stocks? Let's 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 Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.
Currently, United Rentals has a Zacks Rank of #2 (Buy), while Simpson Manufacturing has a Zacks Rank of #3 (Hold). Investors should feel comfortable knowing that URI likely has seen a stronger improvement to its earnings outlook than SSD has recently. But this is just one piece of the puzzle for value investors.
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 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.
URI currently has a forward P/E ratio of 6.69, while SSD has a forward P/E of 17.53. We also note that URI has a PEG ratio of 0.38. 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. SSD currently has a PEG ratio of 3.51.
Another notable valuation metric for URI is its P/B ratio of 2.65. 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, SSD has a P/B of 2.71.
These metrics, and several others, help URI earn a Value grade of A, while SSD has been given a Value grade of C.
URI stands above SSD thanks to its solid earnings outlook, and based on these valuation figures, we also feel that URI is the superior value option right now.
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United Rentals, Inc. (URI) : Free Stock Analysis Report
Simpson Manufacturing Company, Inc. (SSD) : Free Stock Analysis Report
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