Investors interested in Building Products - Miscellaneous stocks are likely familiar with PGT (PGTI) and Simpson Manufacturing (SSD). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.
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.
Right now, PGT is sporting a Zacks Rank of #1 (Strong Buy), while Simpson Manufacturing has a Zacks Rank of #3 (Hold). Investors should feel comfortable knowing that PGTI likely has seen a stronger improvement to its earnings outlook than SSD has recently. 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.
PGTI currently has a forward P/E ratio of 19.20, while SSD has a forward P/E of 26.53. We also note that PGTI has a PEG ratio of 2.08. 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 5.31.
Another notable valuation metric for PGTI is its P/B ratio of 2.52. 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 3.73.
Based on these metrics and many more, PGTI holds a Value grade of B, while SSD has a Value grade of D.
PGTI is currently sporting an improving earnings outlook, which makes it stick out in our Zacks Rank model. And, based on the above valuation metrics, we feel that PGTI is likely the superior value option right now.
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PGT, Inc. (PGTI) : Free Stock Analysis Report
Simpson Manufacturing Company, Inc. (SSD) : Free Stock Analysis Report
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