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ACA vs. SSD: Which Stock Is the Better Value Option?

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Investors with an interest in Building Products - Miscellaneous stocks have likely encountered both Arcosa (ACA - Free Report) and Simpson Manufacturing (SSD - 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 proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.

Arcosa and Simpson Manufacturing are sporting Zacks Ranks of #2 (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 ACA has an improving earnings outlook. But this is just one piece of the puzzle for value investors.

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.

ACA currently has a forward P/E ratio of 16.46, while SSD has a forward P/E of 18.88. We also note that ACA has a PEG ratio of 1.26. 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. SSD currently has a PEG ratio of 3.78.

Another notable valuation metric for ACA is its P/B ratio of 0.89. 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, SSD has a P/B of 3.29.

These metrics, and several others, help ACA earn a Value grade of A, while SSD has been given a Value grade of D.

ACA 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 ACA is likely the superior value option right now.


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Simpson Manufacturing Company, Inc. (SSD) - free report >>

Arcosa, Inc. (ACA) - free report >>

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