Investors looking for stocks in the Building Products - Miscellaneous sector might want to consider either United Rentals (URI - Free Report) or Masco (MAS - 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 Zacks Rank is a proven strategy that targets companies with positive earnings estimate revision trends, while our Style Scores work to grade companies based on specific traits.
United Rentals and Masco are both sporting a Zacks Rank of # 2 (Buy) right now. 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 piece of the puzzle for value investors.
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.
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.
URI currently has a forward P/E ratio of 11.73, while MAS has a forward P/E of 21.96. We also note that URI has a PEG ratio of 0.98. 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. MAS currently has a PEG ratio of 1.47.
Another notable valuation metric for URI is its P/B ratio of 3.30. 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, MAS has a P/B of 418.38.
Based on these metrics and many more, URI holds a Value grade of A, while MAS has a Value grade of C.
Both URI and MAS are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that URI is the superior value option right now.