Investors interested in Furniture stocks are likely familiar with American Woodmark (AMWD - Free Report) and WillScot (WSC - Free Report) . But which of these two companies is the best option for those looking for undervalued stocks? Let's 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 proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
Currently, American Woodmark has a Zacks Rank of #2 (Buy), while WillScot has a Zacks Rank of #3 (Hold). This means that AMWD's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. But this is just one factor that value investors are interested in.
Value investors also try to analyze a wide range of traditional figures and metrics to help determine whether a company is undervalued at its 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.
AMWD currently has a forward P/E ratio of 14.62, while WSC has a forward P/E of 27.01. We also note that AMWD has a PEG ratio of 1.62. 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. WSC currently has a PEG ratio of 1.80.
Another notable valuation metric for AMWD is its P/B ratio of 2.75. 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, WSC has a P/B of 3.22.
These metrics, and several others, help AMWD earn a Value grade of A, while WSC has been given a Value grade of D.
AMWD sticks out from WSC in both our Zacks Rank and Style Scores models, so value investors will likely feel that AMWD is the better option right now.