Investors interested in stocks from the Building Products - Wood sector have probably already heard of Norbord (OSB - Free Report) and Floor & Decor Holdings, Inc. (FND - Free Report) . But which of these two stocks presents investors with the better value opportunity right now? Let's take a closer look.
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, both Norbord and Floor & Decor Holdings, Inc. are holding a Zacks Rank of # 2 (Buy). This means that both companies have witnessed positive earnings estimate revisions, so investors should feel comfortable knowing that both of these stocks have an improving earnings outlook. However, value investors will care about much more than just this.
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 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.
OSB currently has a forward P/E ratio of 8.55, while FND has a forward P/E of 49.22. We also note that OSB has a PEG ratio of 0.99. 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. FND currently has a PEG ratio of 1.87.
Another notable valuation metric for OSB is its P/B ratio of 3.25. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. For comparison, FND has a P/B of 9.74.
These metrics, and several others, help OSB earn a Value grade of B, while FND has been given a Value grade of D.
Both OSB and FND are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that OSB is the superior value option right now.