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URI vs. AWI: Which Stock Should Value Investors Buy Now?

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Investors looking for stocks in the Building Products - Miscellaneous sector might want to consider either United Rentals (URI - Free Report) or 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.

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 proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.

Currently, United Rentals has a Zacks Rank of #1 (Strong Buy), while Armstrong World Industries has a Zacks Rank of #3 (Hold). Investors should feel comfortable knowing that URI likely has seen a stronger improvement to its earnings outlook than AWI has recently. But this is just one piece of the puzzle for value investors.

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 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 10.29, while AWI has a forward P/E of 17.33. We also note that URI has a PEG ratio of 0.58. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. AWI currently has a PEG ratio of 1.44.

Another notable valuation metric for URI is its P/B ratio of 3.69. 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 7.80.

These metrics, and several others, help URI earn a Value grade of B, while AWI has been given a Value grade of C.

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


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