Investors with an interest in Building Products - Miscellaneous stocks have likely encountered both BELLWAY (BLWYY - Free Report) and Construction Partners (ROAD - Free Report) . But which of these two stocks presents investors with the better value opportunity right now? 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 Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.
BELLWAY and Construction Partners are sporting Zacks Ranks of #2 (Buy) and #5 (Strong Sell), respectively, right now. This means that BLWYY'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 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 Style Score Value grade factors in a variety of key fundamental metrics, including the popular P/E ratio, P/S ratio, earnings yield, cash flow per share, and a number of other key stats that are commonly used by value investors.
BLWYY currently has a forward P/E ratio of 7.27, while ROAD has a forward P/E of 19.08. We also note that BLWYY has a PEG ratio of 7.27. This figure is similar to the commonly-used P/E ratio, with the PEG ratio also factoring in a company's expected earnings growth rate. ROAD currently has a PEG ratio of 7.98.
Another notable valuation metric for BLWYY is its P/B ratio of 1.25. 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, ROAD has a P/B of 2.57.
These are just a few of the metrics contributing to BLWYY's Value grade of A and ROAD's Value grade of C.
BLWYY stands above ROAD thanks to its solid earnings outlook, and based on these valuation figures, we also feel that BLWYY is the superior value option right now.