EQPT vs. FAST: Which Stock Is the Better Value Option?

Investors interested in stocks from the Industrial Services sector have probably already heard of EquipmentShare.com Inc. (EQPT) and Fastenal (FAST). 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 Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.

Both EquipmentShare.com Inc. and Fastenal have 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 these stocks have improving earnings outlooks. But this is just one piece of the puzzle for value investors.

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 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.

EQPT currently has a forward P/E ratio of 36.46, while FAST has a forward P/E of 38.07. We also note that EQPT has a PEG ratio of 1.82. 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. FAST currently has a PEG ratio of 2.99.

Another notable valuation metric for EQPT is its P/B ratio of 4.15. 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, FAST has a P/B of 13.5.

These metrics, and several others, help EQPT earn a Value grade of B, while FAST has been given a Value grade of D.

Both EQPT and FAST are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that EQPT is the superior value option right now.

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This article originally published on Zacks Investment Research (zacks.com).

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