Investors interested in Building Products - Miscellaneous stocks are likely familiar with Owens Corning (OC) and Installed Building Products (IBP). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.
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 emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.
Owens Corning has a Zacks Rank of #1 (Strong Buy), while Installed Building Products has a Zacks Rank of #2 (Buy) right now. This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that OC 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 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.
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.
OC currently has a forward P/E ratio of 12.46, while IBP has a forward P/E of 18.75. We also note that OC has a PEG ratio of 1.85. This popular figure is similar to the widely-used P/E ratio, but the PEG ratio also considers a company's expected EPS growth rate. IBP currently has a PEG ratio of 3.45.
Another notable valuation metric for OC is its P/B ratio of 2.62. 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 8.21.
These are just a few of the metrics contributing to OC's Value grade of A and IBP's Value grade of C.
OC stands above IBP thanks to its solid earnings outlook, and based on these valuation figures, we also feel that OC is the superior value option right now.
Beyond Nvidia: AI's Second Wave Is Here
The AI revolution has already minted millionaires. But the stocks everyone knows about aren't likely to keep delivering the biggest profits. AI’s second wave is moving from infrastructure to implementation and these companies are at the forefront of this transition, positioned to become what Amazon and Google were to the internet era.
See Stocks 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
Owens Corning Inc (OC): Free Stock Analysis Report
Installed Building Products, Inc. (IBP): Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).