Investors looking for stocks in the Building Products - Miscellaneous sector might want to consider either TopBuild (BLD) or GCP Applied Technologies (GCP). But which of these two stocks presents investors with the better value opportunity right now? Let's take a closer look.
The best way to find great value stocks is to pair a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system. The Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.
TopBuild has a Zacks Rank of #1 (Strong Buy), while GCP Applied Technologies has a Zacks Rank of #4 (Sell) right now. This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that BLD is likely seeing its earnings outlook improve to a greater extent. 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 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.
BLD currently has a forward P/E ratio of 16.44, while GCP has a forward P/E of 24.09. We also note that BLD has a PEG ratio of 0.59. 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. GCP currently has a PEG ratio of 1.34.
Another notable valuation metric for BLD is its P/B ratio of 2.56. 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, GCP has a P/B of 3.70.
These are just a few of the metrics contributing to BLD's Value grade of B and GCP's Value grade of D.
BLD stands above GCP thanks to its solid earnings outlook, and based on these valuation figures, we also feel that BLD is the superior value option right now.
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