Investors looking for stocks in the Building Products - Wood sector might want to consider either Boise Cascade (BCC) or Louisiana-Pacific (LPX). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.
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 Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.
Boise Cascade has a Zacks Rank of #2 (Buy), while Louisiana-Pacific has a Zacks Rank of #5 (Strong Sell) right now. This means that BCC's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. But this is just one piece of the puzzle 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.
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.
BCC currently has a forward P/E ratio of 19.00, while LPX has a forward P/E of 60.93. We also note that BCC 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. LPX currently has a PEG ratio of 10.05.
Another notable valuation metric for BCC is its P/B ratio of 1.28. 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, LPX has a P/B of 2.64.
These metrics, and several others, help BCC earn a Value grade of A, while LPX has been given a Value grade of D.
BCC has seen stronger estimate revision activity and sports more attractive valuation metrics than LPX, so it seems like value investors will conclude that BCC is the superior option right now.
7 Best Stocks for the Next 30 Days
Just released: Experts distill 7 elite stocks from the current list of 220 Zacks Rank #1 Strong Buys. They deem these tickers "Most Likely for Early Price Pops."
Since 1988, the full list has beaten the market more than 2X over with an average gain of +23.9% per year. So be sure to give these hand picked 7 your immediate attention.
See them now >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Boise Cascade, L.L.C. (BCC): Free Stock Analysis Report
Louisiana-Pacific Corporation (LPX): Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).