BLD vs. AWI: Which Stock Should Value Investors Buy Now?
Investors with an interest in Building Products - Miscellaneous stocks have likely encountered both TopBuild (BLD) and Armstrong World Industries (AWI). But which of these two companies is the best option for those looking for undervalued stocks? Let's 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 proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
TopBuild and Armstrong World Industries are sporting Zacks Ranks of #1 (Strong Buy) and #3 (Hold), respectively, 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 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.
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.
BLD currently has a forward P/E ratio of 19.59, while AWI has a forward P/E of 20.53. We also note that BLD has a PEG ratio of 0.70. 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. AWI currently has a PEG ratio of 1.31.
Another notable valuation metric for BLD is its P/B ratio of 3.07. Investors use the P/B ratio to look at a stock's market value versus its book value, which is defined as total assets minus total liabilities. By comparison, AWI has a P/B of 12.37.
These are just a few of the metrics contributing to BLD's Value grade of B and AWI's Value grade of C.
BLD sticks out from AWI in both our Zacks Rank and Style Scores models, so value investors will likely feel that BLD is the better option right now.
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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.