Investors interested in Building Products - Miscellaneous stocks are likely familiar with Holcim Ltd Unsponsored ADR (HCMLY) and Installed Building Products (IBP). 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 proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
Holcim Ltd Unsponsored ADR and Installed Building Products are sporting Zacks Ranks of #2 (Buy) and #4 (Sell), respectively, right now. This means that HCMLY's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. But this is only part of the picture for value investors.
Value investors are also interested in a number of tried-and-true valuation metrics that help show when a company is undervalued at its current share price levels.
The Style Score Value grade factors in a variety of key fundamental metrics, including the popular P/E ratio, P/S ratio, earnings yield, cash flow per share, and a number of other key stats that are commonly used by value investors.
HCMLY currently has a forward P/E ratio of 21.16, while IBP has a forward P/E of 29.29. We also note that HCMLY has a PEG ratio of 2.00. This figure is similar to the commonly-used P/E ratio, with the PEG ratio also factoring in a company's expected earnings growth rate. IBP currently has a PEG ratio of 7.04.
Another notable valuation metric for HCMLY is its P/B ratio of 2.87. 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, IBP has a P/B of 12.85.
These are just a few of the metrics contributing to HCMLY's Value grade of B and IBP's Value grade of D.
HCMLY has seen stronger estimate revision activity and sports more attractive valuation metrics than IBP, so it seems like value investors will conclude that HCMLY is the superior option right now.
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Holcim Ltd Unsponsored ADR (HCMLY): Free Stock Analysis Report
Installed Building Products, Inc. (IBP): Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).