Investors interested in stocks from the Building Products – Miscellaneous sector have probably already heard of Patrick Industries (PATK) and Armstrong World Industries (AWI). But which of these two stocks presents investors with the better value opportunity right now? Let’s take a closer look.
We have found that the best way to discover great value opportunities is to pair a strong Zacks Rank with a great 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.
Right now, Patrick Industries is sporting a Zacks Rank of #1 (Strong Buy), while Armstrong World Industries has a Zacks Rank of #2 (Buy). This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that PATK is likely seeing its earnings outlook improve to a greater extent. But this is just one factor that value investors are interested in.
Value investors also try to analyze a wide range of traditional figures and metrics to help determine whether a company is undervalued at its current share price levels.
Our Value category highlights undervalued companies by looking at a variety of key metrics, including the popular P/E ratio, as well as the P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that have been used by value investors for years.
PATK currently has a forward P/E ratio of 13.77, while AWI has a forward P/E of 19.01. We also note that PATK has a PEG ratio of 0.92. 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. AWI currently has a PEG ratio of 1.14.
Another notable valuation metric for PATK is its P/B ratio of 3.97. The P/B is a method of comparing a stock’s market value to its book value, which is defined as total assets minus total liabilities. By comparison, AWI has a P/B of 9.08.
These are just a few of the metrics contributing to PATK’s Value grade of B and AWI’s Value grade of C.
PATK 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 PATK is likely the superior value option right now.
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