Investors with an interest in Building Products - Retail stocks have likely encountered both Lumber Liquidators Holdings (LL - Free Report) and Fastenal (FAST - 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.
Everyone has their own methods for finding great value opportunities, but our model includes pairing an impressive grade in the Value category of our Style Scores system with a strong Zacks Rank. 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.
Right now, Lumber Liquidators Holdings is sporting a Zacks Rank of #2 (Buy), while Fastenal has a Zacks Rank of #4 (Sell). Investors should feel comfortable knowing that LL likely has seen a stronger improvement to its earnings outlook than FAST has recently. However, value investors will care about much more than just this.
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.
LL currently has a forward P/E ratio of 9.02, while FAST has a forward P/E of 23.89. We also note that LL has a PEG ratio of 0.33. 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. FAST currently has a PEG ratio of 1.71.
Another notable valuation metric for LL is its P/B ratio of 0.74. 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, FAST has a P/B of 6.57.
These are just a few of the metrics contributing to LL's Value grade of B and FAST's Value grade of F.
LL has seen stronger estimate revision activity and sports more attractive valuation metrics than FAST, so it seems like value investors will conclude that LL is the superior option right now.