Investors interested in Building Products - Miscellaneous stocks are likely familiar with United Rentals (URI - Free Report) and Masco (MAS - Free Report) . But which of these two stocks presents investors with the better value opportunity right now? Let's take a closer look.
We have found that the best way to discover great value opportunities is to pair a strong Zacks Rank with a great grade in the Value category of our Style Scores system. The proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
Currently, both United Rentals and Masco are holding a Zacks Rank of # 2 (Buy). The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that both of these companies have improving earnings outlooks. However, value investors will care about much more than just this.
Value investors also tend to look at a number of traditional, tried-and-true figures to help them find stocks 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.
URI currently has a forward P/E ratio of 12.82, while MAS has a forward P/E of 22.20. We also note that URI has a PEG ratio of 1.07. 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 1.49.
Another notable valuation metric for URI is its P/B ratio of 3.41. Investors use the P/B ratio to look at a stock's market value versus its book value, which is defined as total assets minus total liabilities. By comparison, MAS has a P/B of 422.90.
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.