Back to top

Image: Bigstock

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

Read MoreHide Full Article

Investors interested in stocks from the Building Products - Miscellaneous sector have probably already heard of 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.

We have found that the best way to discover great value opportunities is to pair a strong Zacks Rank with a great grade in the Value category of our Style Scores system. 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.

Currently, Arcosa has a Zacks Rank of #2 (Buy), while Simpson Manufacturing has a Zacks Rank of #4 (Sell). Investors should feel comfortable knowing that ACA likely has seen a stronger improvement to its earnings outlook than SSD has recently. 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.

ACA currently has a forward P/E ratio of 16.34, while SSD has a forward P/E of 19.33. We also note that ACA has a PEG ratio of 1.25. 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. SSD currently has a PEG ratio of 3.87.

Another notable valuation metric for ACA is its P/B ratio of 0.89. 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, SSD has a P/B of 3.33.

These are just a few of the metrics contributing to ACA's Value grade of A and SSD's Value grade of D.

ACA has seen stronger estimate revision activity and sports more attractive valuation metrics than SSD, so it seems like value investors will conclude that ACA is the superior option right now.


See More Zacks Research for These Tickers


Normally $25 each - click below to receive one report FREE:


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

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

Published in