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GMS or FAST: Which Is the Better Value Stock Right 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 is more attractive to value investors? We'll need to take a closer look to find out.

There are plenty of strategies for discovering value stocks, but we have found that pairing a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system produces the best returns. The proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.

GMS Inc. has a Zacks Rank of #2 (Buy), while Fastenal has a Zacks Rank of #3 (Hold) right now. Investors should feel comfortable knowing that GMS likely has seen a stronger improvement to its earnings outlook than FAST has recently. But this is just one factor that value investors are interested in.

Value investors also try to analyze a wide range of traditional figures and metrics to help determine whether 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.

GMS currently has a forward P/E ratio of 10.15, while FAST has a forward P/E of 26.24. We also note that GMS has a PEG ratio of 1.45. 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 1.64.

Another notable valuation metric for GMS is its P/B ratio of 1.98. 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 8.06.

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

GMS sticks out from FAST in both our Zacks Rank and Style Scores models, so value investors will likely feel that GMS is the better option right now.


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