Investors interested in stocks from the Building Products - Heavy Construction sector have probably already heard of Primoris Services (PRIM - Free Report) and Dycom Industries (DY - Free Report) . But which of these two stocks presents investors with the better value opportunity right now? 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 proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.
Currently, Primoris Services has a Zacks Rank of #2 (Buy), while Dycom Industries has a Zacks Rank of #5 (Strong Sell). This means that PRIM's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. 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 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.
PRIM currently has a forward P/E ratio of 16.43, while DY has a forward P/E of 29.18. We also note that PRIM has a PEG ratio of 1.64. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. DY currently has a PEG ratio of 2.37.
Another notable valuation metric for PRIM is its P/B ratio of 2.27. 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, DY has a P/B of 3.28.
These metrics, and several others, help PRIM earn a Value grade of A, while DY has been given a Value grade of D.
PRIM stands above DY thanks to its solid earnings outlook, and based on these valuation figures, we also feel that PRIM is the superior value option right now.