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ACA or AWI: Which Is the Better Value Stock Right Now?

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Investors looking for stocks in the Building Products - Miscellaneous sector might want to consider either Arcosa (ACA - Free Report) or Armstrong World Industries (AWI - 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 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.

Currently, Arcosa has a Zacks Rank of #2 (Buy), while Armstrong World Industries has a Zacks Rank of #5 (Strong Sell). This means that ACA's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. But this is just one factor that value investors are interested in.

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.

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.

ACA currently has a forward P/E ratio of 17.35, while AWI has a forward P/E of 19.09. We also note that ACA has a PEG ratio of 5.10. 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. AWI currently has a PEG ratio of 9.59.

Another notable valuation metric for ACA is its P/B ratio of 1.13. 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, AWI has a P/B of 8.12.

Based on these metrics and many more, ACA holds a Value grade of B, while AWI has a Value grade of D.

ACA has seen stronger estimate revision activity and sports more attractive valuation metrics than AWI, so it seems like value investors will conclude that ACA is the superior option right now.


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Armstrong World Industries, Inc. (AWI) - free report >>

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