Back to top

Image: Bigstock

BLDR or FAST: Which Is the Better Value Stock Right Now?

Read MoreHide Full Article

Investors with an interest in Building Products - Retail stocks have likely encountered both Builders FirstSource (BLDR - Free Report) and Fastenal (FAST - Free Report) . But which of these two companies is the best option for those looking for undervalued stocks? Let's take a closer look.

There are plenty of strategies for discovering value stocks, but we have found that pairing a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system produces the best returns. 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.

Builders FirstSource and Fastenal are sporting Zacks Ranks of #2 (Buy) and #3 (Hold), respectively, right now. Investors should feel comfortable knowing that BLDR likely has seen a stronger improvement to its earnings outlook than FAST has recently. 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 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.

BLDR currently has a forward P/E ratio of 14.78, while FAST has a forward P/E of 34.94. We also note that BLDR has a PEG ratio of 1.25. 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. FAST currently has a PEG ratio of 3.88.

Another notable valuation metric for BLDR is its P/B ratio of 5.24. 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, FAST has a P/B of 12.80.

Based on these metrics and many more, BLDR holds a Value grade of A, while FAST has a Value grade of D.

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


See More Zacks Research for These Tickers


Normally $25 each - click below to receive one report FREE:


Fastenal Company (FAST) - free report >>

Builders FirstSource, Inc. (BLDR) - free report >>

Published in