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GMS vs. FAST: Which Stock Should Value Investors Buy Now?

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Investors interested in stocks from the Building Products - Retail sector have probably already heard of GMS Inc. (GMS - Free Report) and Fastenal (FAST - Free Report) . 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.

Everyone has their own methods for finding great value opportunities, but our model includes pairing an impressive grade in the Value category of our Style Scores system with a strong Zacks Rank. The proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.

Currently, both GMS Inc. and Fastenal are holding a Zacks Rank of # 2 (Buy). This means that both companies have witnessed positive earnings estimate revisions, so investors should feel comfortable knowing that both of these stocks have an improving earnings outlook. But this is just one factor that value investors are interested in.

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.

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.

GMS currently has a forward P/E ratio of 7.77, while FAST has a forward P/E of 22.40. We also note that GMS has a PEG ratio of 1.11. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. FAST currently has a PEG ratio of 1.60.

Another notable valuation metric for GMS is its P/B ratio of 1.79. The P/B is a method of comparing a stock's market value to its book value, which is defined as total assets minus total liabilities. By comparison, FAST has a P/B of 7.38.

These are just a few of the metrics contributing to GMS's Value grade of A and FAST's Value grade of C.

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


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