Investors interested in Building Products - Retail stocks are likely familiar with Tecnoglass (TGLS - Free Report) and Fastenal (FAST - Free Report) . But which of these two companies is the best option for those looking for undervalued stocks? 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, Tecnoglass has a Zacks Rank of #2 (Buy), while Fastenal has a Zacks Rank of #3 (Hold). This means that TGLS's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. But this is just one piece of the puzzle for value investors.
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 11.96, while FAST has a forward P/E of 22.26. We also note that TGLS has a PEG ratio of 0.60. 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. FAST currently has a PEG ratio of 1.59.
Another notable valuation metric for TGLS is its P/B ratio of 2.29. 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, FAST has a P/B of 7.14.
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.