Investors interested in stocks from the Building Products - Retail sector have probably already heard of Tecnoglass (TGLS - Free Report) and Fastenal (FAST - 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 puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
Tecnoglass and Fastenal are sporting Zacks Ranks of #1 (Strong Buy) and #3 (Hold), respectively, right now. The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that TGLS has an improving earnings outlook. However, value investors will care about much more than just this.
Value investors are also interested in a number of tried-and-true valuation metrics that help show when 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.
TGLS currently has a forward P/E ratio of 14.73, while FAST has a forward P/E of 22.70. We also note that TGLS has a PEG ratio of 0.74. 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. FAST currently has a PEG ratio of 1.62.
Another notable valuation metric for TGLS is its P/B ratio of 2.49. 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, FAST has a P/B of 7.48.
These are just a few of the metrics contributing to TGLS's Value grade of B and FAST's Value grade of D.
TGLS stands above FAST thanks to its solid earnings outlook, and based on these valuation figures, we also feel that TGLS is the superior value option right now.