Should Value Investors Buy Beacon Roofing Supply (BECN) Stock?
Here at Zacks, our focus is on the proven Zacks Rank system, which emphasizes earnings estimates and estimate revisions to find great stocks. Nevertheless, we are always paying attention to the latest value, growth, and momentum trends to underscore strong picks.
Of these, perhaps no stock market trend is more popular than value investing, which is a strategy that has proven to be successful in all sorts of market environments. Value investors use tried-and-true metrics and fundamental analysis to find companies that they believe are undervalued at their current share price levels.
Luckily, Zacks has developed its own Style Scores system in an effort to find stocks with specific traits. Value investors will be interested in the system's "Value" category. Stocks with both "A" grades in the Value category and high Zacks Ranks are among the strongest value stocks on the market right now.
Beacon Roofing Supply (BECN) is a stock many investors are watching right now. BECN is currently sporting a Zacks Rank of #2 (Buy) and an A for Value. The stock is trading with a P/E ratio of 10.55, which compares to its industry's average of 17.37. Over the past year, BECN's Forward P/E has been as high as 12.74 and as low as 7.29, with a median of 9.98.
BECN is also sporting a PEG ratio of 1.41. 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. BECN's industry currently sports an average PEG of 1.83. Over the past 52 weeks, BECN's PEG has been as high as 1.74 and as low as 1.29, with a median of 1.59.
Value investors also love the P/S ratio, which is calculated by simply dividing a stock's price with the company's sales. This is a prefered metric because revenue can't really be manipulated, so sales are often a truer performance indicator. BECN has a P/S ratio of 0.59. This compares to its industry's average P/S of 0.95.
Finally, our model also underscores that BECN has a P/CF ratio of 8.95. This data point considers a firm's operating cash flow and is frequently used to find companies that are undervalued when considering their solid cash outlook. This company's current P/CF looks solid when compared to its industry's average P/CF of 13.20. BECN's P/CF has been as high as 13.59 and as low as 5.55, with a median of 7.72, all within the past year.
Value investors will likely look at more than just these metrics, but the above data helps show that Beacon Roofing Supply is likely undervalued currently. And when considering the strength of its earnings outlook, BECN sticks out at as one of the market's strongest value stocks.
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Beacon Roofing Supply, Inc. (BECN) : Free Stock Analysis Report
