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Should Value Investors Buy Quanex Building Products (NX) Stock?

Zacks Equity Research

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.

Looking at the history of these trends, perhaps none is more beloved than value investing. This strategy simply looks to identify companies that are being undervalued by the broader market. Value investors use a variety of methods, including tried-and-true valuation metrics, to find these stocks.

On top of the Zacks Rank, investors can also look at our innovative Style Scores system to find stocks with specific traits. For example, value investors will want to focus on the "Value" category. Stocks with high Zacks Ranks and "A" grades for Value will be some of the highest-quality value stocks on the market today.

Quanex Building Products (NX) is a stock many investors are watching right now. NX is currently sporting a Zacks Rank of #1 (Strong Buy), as well as a Value grade of A.

Another notable valuation metric for NX is its P/B ratio of 1.77. The P/B ratio is used to compare a stock's market value with its book value, which is defined as total assets minus total liabilities. This stock's P/B looks attractive against its industry's average P/B of 2.34. Within the past 52 weeks, NX's P/B has been as high as 1.78 and as low as 1.10, with a median of 1.48.

Value investors also love the P/S ratio, which is calculated by simply dividing a stock's price with the company's sales. Some people prefer this metric because sales are harder to manipulate on an income statement. This means it could be a truer performance indicator. NX has a P/S ratio of 0.71. This compares to its industry's average P/S of 1.12.

Value investors will likely look at more than just these metrics, but the above data helps show that Quanex Building Products is likely undervalued currently. And when considering the strength of its earnings outlook, NX sticks out at as one of the market's strongest value stocks.


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Zacks Investment Research