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

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Investors with an interest in Building Products - Miscellaneous stocks have likely encountered both United Rentals (URI - Free Report) and Armstrong World Industries (AWI - 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.

The best way to find great value stocks is to pair a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system. The Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.

United Rentals has a Zacks Rank of #2 (Buy), while Armstrong World Industries has a Zacks Rank of #3 (Hold) right now. This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that URI is likely seeing its earnings outlook improve to a greater extent. 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.

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.

URI currently has a forward P/E ratio of 17.51, while AWI has a forward P/E of 24.36. We also note that URI has a PEG ratio of 1.65. 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 6.62.

Another notable valuation metric for URI is its P/B ratio of 5.17. 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, AWI has a P/B of 9.89.

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

URI stands above AWI thanks to its solid earnings outlook, and based on these valuation figures, we also feel that URI is the superior value option right now.


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