Should Value Investors Buy Beacon Roofing Supply (BECN) Stock?
While the proven Zacks Rank places an emphasis on earnings estimates and estimate revisions to find strong stocks, we also know that investors tend to develop their own individual strategies. With this in mind, we are always looking at value, growth, and momentum trends to discover great companies.
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 a variety of methods, including tried-and-true valuation metrics, to find these stocks.
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.
One stock to keep an eye on is Beacon Roofing Supply (BECN). BECN is currently sporting a Zacks Rank of #2 (Buy), as well as an A grade for Value. The stock has a Forward P/E ratio of 10.10. This compares to its industry's average Forward P/E of 16.21. Over the last 12 months, BECN's Forward P/E has been as high as 12.74 and as low as 7.29, with a median of 9.83.
Investors should also note that BECN holds a PEG ratio of 1.54. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. BECN's industry has an average PEG of 1.66 right now. Over the last 12 months, BECN's PEG has been as high as 1.74 and as low as 1.46, with a median of 1.60.
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 popular metric because sales are harder to manipulate on an income statement, so they are often considered a better performance indicator. BECN has a P/S ratio of 0.53. This compares to its industry's average P/S of 0.9.
Finally, investors will want to recognize that BECN has a P/CF ratio of 8.31. 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 12.44. Over the past year, BECN's P/CF has been as high as 13.59 and as low as 5.55, with a median of 8.12.
These are only a few of the key metrics included in Beacon Roofing Supply's strong Value grade, but they help show that the stock is likely undervalued right now. When factoring in the strength of its earnings outlook, BECN looks like an impressive value stock at the moment.
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Beacon Roofing Supply, Inc. (BECN) : Free Stock Analysis Report
