Investors interested in stocks from the Building Products - Miscellaneous sector have probably already heard of United Rentals (URI - Free Report) and GCP Applied Technologies (GCP - Free Report) . But which of these two stocks presents investors with the better value opportunity right now? Let's take a closer look.
The best way to find great value stocks is to pair a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system. The proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
United Rentals has a Zacks Rank of #2 (Buy), while GCP Applied Technologies has a Zacks Rank of #5 (Strong Sell) right now. This means that URI's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. But this is only part of the picture for value investors.
Value investors analyze a variety of traditional, tried-and-true metrics to help find companies 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.
URI currently has a forward P/E ratio of 9.70, while GCP has a forward P/E of 27.98. We also note that URI has a PEG ratio of 0.55. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. GCP currently has a PEG ratio of 1.55.
Another notable valuation metric for URI is its P/B ratio of 4.08. 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, GCP has a P/B of 4.22.
Based on these metrics and many more, URI holds a Value grade of A, while GCP has a Value grade of F.
URI is currently sporting an improving earnings outlook, which makes it stick out in our Zacks Rank model. And, based on the above valuation metrics, we feel that URI is likely the superior value option right now.