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URI vs. AWI: Which Stock Should Value Investors Buy Now?

Zacks Equity Research
McClatchy (MNI) doesn't possess the right combination of the two key ingredients for a likely earnings beat in its upcoming report. Get prepared with the key expectations.

Investors looking for stocks in the Building Products - Miscellaneous sector might want to consider either United Rentals (URI) or Armstrong World Industries (AWI). 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 Zacks Rank is a proven strategy that targets companies with positive earnings estimate revision trends, while our Style Scores work to grade companies based on specific traits.

United Rentals and Armstrong World Industries are both sporting a Zacks Rank of # 2 (Buy) right now. The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that both of these companies have improving earnings outlooks. But this is just one factor that value investors are interested in.

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.

URI currently has a forward P/E ratio of 5.78, while AWI has a forward P/E of 16.90. We also note that URI has a PEG ratio of 0.33. 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. AWI currently has a PEG ratio of 1.04.

Another notable valuation metric for URI is its P/B ratio of 2.61. 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, AWI has a P/B of 14.30.

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

Both URI and AWI are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that URI is 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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