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

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Investors interested in Building Products - Miscellaneous stocks are likely familiar with Owens Corning (OC - Free Report) and Armstrong World Industries (AWI - Free Report) . But which of these two companies is the best option for those looking for undervalued stocks? 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.

Owens Corning has a Zacks Rank of #2 (Buy), while Armstrong World Industries has a Zacks Rank of #4 (Sell) right now. Investors should feel comfortable knowing that OC likely has seen a stronger improvement to its earnings outlook than AWI has recently. However, value investors will care about much more than just this.

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 highlights undervalued companies by looking at a variety of key metrics, including the popular P/E ratio, as well as the P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that have been used by value investors for years.

OC currently has a forward P/E ratio of 13.31, while AWI has a forward P/E of 20.29. We also note that OC has a PEG ratio of 0.95. This figure is similar to the commonly-used P/E ratio, with the PEG ratio also factoring in a company's expected earnings growth rate. AWI currently has a PEG ratio of 5.51.

Another notable valuation metric for OC is its P/B ratio of 2.26. 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 8.40.

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

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


In-Depth Zacks Research for the Tickers Above


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