ACA vs. SSD: Which Stock Is the Better Value Option?
Investors interested in Building Products - Miscellaneous stocks are likely familiar with Arcosa (ACA) and Simpson Manufacturing (SSD). But which of these two companies is the best option for those looking for undervalued stocks? 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 proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.
Right now, Arcosa is sporting a Zacks Rank of #1 (Strong Buy), while Simpson Manufacturing has a Zacks Rank of #3 (Hold). The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that ACA has an improving earnings outlook. 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.
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.
ACA currently has a forward P/E ratio of 17.45, while SSD has a forward P/E of 20.82. We also note that ACA has a PEG ratio of 1.38. 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. SSD currently has a PEG ratio of 4.16.
Another notable valuation metric for ACA is its P/B ratio of 1.03. 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, SSD has a P/B of 3.52.
Based on these metrics and many more, ACA holds a Value grade of A, while SSD has a Value grade of D.
ACA stands above SSD thanks to its solid earnings outlook, and based on these valuation figures, we also feel that ACA is the superior value option right now.
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Arcosa, Inc. (ACA): Free Stock Analysis Report
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.