Investors looking for stocks in the Industrial Services sector might want to consider either Global Industrial (GIC) or W.W. Grainger (GWW). 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 proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.
Right now, Global Industrial is sporting a Zacks Rank of #2 (Buy), while W.W. Grainger has a Zacks Rank of #3 (Hold). Investors should feel comfortable knowing that GIC likely has seen a stronger improvement to its earnings outlook than GWW has recently. However, value investors will care about much more than just this.
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 highlights undervalued companies by looking at a variety of key metrics, including the popular P/E ratio, as well as the P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that have been used by value investors for years.
GIC currently has a forward P/E ratio of 17.03, while GWW has a forward P/E of 26.55. We also note that GIC has a PEG ratio of 1.06. 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. GWW currently has a PEG ratio of 2.44.
Another notable valuation metric for GIC is its P/B ratio of 4.19. 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, GWW has a P/B of 13.3.
These metrics, and several others, help GIC earn a Value grade of B, while GWW has been given a Value grade of D.
GIC 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 GIC is likely the superior value option right now.
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Global Industrial Company (GIC): Free Stock Analysis Report
W.W. Grainger, Inc. (GWW): Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).