Investors interested in Building Products – Heavy Construction stocks are likely familiar with Emcor Group (EME) and Dycom Industries (DY). But which of these two stocks offers value investors a better bang for their buck right now? We’ll need to 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 proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.
Emcor Group and Dycom Industries are sporting Zacks Ranks of #1 (Strong Buy) and #4 (Sell), respectively, right now. This means that EME’s earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. But this is just one factor that value investors are interested in.
Value investors analyze a variety of traditional, tried-and-true metrics to help find companies that they believe are undervalued at their current share price levels.
The Value category of the Style Scores system identifies undervalued companies by looking at a number of key metrics. These include the long-favored P/E ratio, P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that help us determine a company’s fair value.
EME currently has a forward P/E ratio of 12.46, while DY has a forward P/E of 20.35. We also note that EME has a PEG ratio of 0.83. 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. DY currently has a PEG ratio of 2.39.
Another notable valuation metric for EME is its P/B ratio of 2.11. 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, DY has a P/B of 2.21.
Based on these metrics and many more, EME holds a Value grade of A, while DY has a Value grade of F.
EME sticks out from DY in both our Zacks Rank and Style Scores models, so value investors will likely feel that EME is the better option right now.
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