Investors with an interest in Building Products - Wood stocks have likely encountered both Armstrong Flooring (AFI - Free Report) and Rayonier (RYN - Free Report) . But which of these two stocks offers value investors a better bang for their buck right now? We'll need to 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.
Right now, Armstrong Flooring is sporting a Zacks Rank of #1 (Strong Buy), while Rayonier has a Zacks Rank of #3 (Hold). The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that AFI has an improving earnings 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.
The Value category of the Style Scores system identifies undervalued companies by looking at a number of key metrics. These include the long-favored P/E ratio, P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that help us determine a company's fair value.
AFI currently has a forward P/E ratio of 42.09, while RYN has a forward P/E of 46.18. We also note that AFI has a PEG ratio of 1.93. 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. RYN currently has a PEG ratio of 9.24.
Another notable valuation metric for AFI is its P/B ratio of 0.84. The P/B is a method of comparing a stock's market value to its book value, which is defined as total assets minus total liabilities. By comparison, RYN has a P/B of 2.40.
These are just a few of the metrics contributing to AFI's Value grade of B and RYN's Value grade of D.
AFI stands above RYN thanks to its solid earnings outlook, and based on these valuation figures, we also feel that AFI is the superior value option right now.