Investors interested in stocks from the Building Products – Heavy Construction sector have probably already heard of MasTech (MTZ) and Dycom Industries (DY). 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 is a proven strategy that targets companies with positive earnings estimate revision trends, while our Style Scores work to grade companies based on specific traits.
MasTech has a Zacks Rank of #2 (Buy), while Dycom Industries has a Zacks Rank of #5 (Strong Sell) right now. The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that MTZ has an improving earnings outlook. But this is just one piece of the puzzle for value investors.
Value investors also tend to look at a number of traditional, tried-and-true figures to help them find stocks that they believe are undervalued at their current share price levels.
Our Value category grades stocks based on a number of key metrics, including the tried-and-true P/E ratio, the P/S ratio, earnings yield, and cash flow per share, as well as a variety of other fundamentals that value investors frequently use.
MTZ currently has a forward P/E ratio of 13.82, while DY has a forward P/E of 20.68. We also note that MTZ has a PEG ratio of 0.99. 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. DY currently has a PEG ratio of 1.68.
Another notable valuation metric for MTZ is its P/B ratio of 2.97. 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. For comparison, DY has a P/B of 4.
These metrics, and several others, help MTZ earn a Value grade of A, while DY has been given a Value grade of C.
MTZ 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 MTZ is likely the superior value option right now.
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