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URI vs. AWI: Which Stock Is the Better Value Option?

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Zacks Equity Research
·2 min read
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Investors interested in stocks from the Building Products - Miscellaneous sector have probably already heard of United Rentals (URI) and Armstrong World Industries (AWI). 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.

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 Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.

United Rentals and Armstrong World Industries are sporting Zacks Ranks of #2 (Buy) and #4 (Sell), respectively, right now. This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that URI is likely seeing its earnings outlook improve to a greater extent. But this is only part of the picture for value investors.

Value investors also tend to look at a number of traditional, tried-and-true figures to help them find stocks 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.

URI currently has a forward P/E ratio of 15.01, while AWI has a forward P/E of 20.73. We also note that URI has a PEG ratio of 2.27. 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. AWI currently has a PEG ratio of 5.63.

Another notable valuation metric for URI is its P/B ratio of 4.51. 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, AWI has a P/B of 8.80.

These metrics, and several others, help URI earn a Value grade of A, while AWI has been given a Value grade of C.

URI 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 URI is likely the superior value option right now.


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United Rentals, Inc. (URI) : Free Stock Analysis Report
 
Armstrong World Industries, Inc. (AWI) : Free Stock Analysis Report
 
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