Investors with an interest in Building Products - Concrete and Aggregates stocks have likely encountered both Cemex (CX) and Martin Marietta (MLM). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.
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 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.
Cemex has a Zacks Rank of #2 (Buy), while Martin Marietta has a Zacks Rank of #3 (Hold) right now. This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that CX is likely seeing its earnings outlook improve to a greater extent. However, value investors will care about much more than just this.
Value investors analyze a variety of traditional, tried-and-true metrics to help find companies that they believe are undervalued at their current share price levels.
The Value category of the Style Scores system identifies undervalued companies by looking at a number of key metrics. These include the long-favored P/E ratio, P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that help us determine a company's fair value.
CX currently has a forward P/E ratio of 9.28, while MLM has a forward P/E of 24.86. We also note that CX has a PEG ratio of 0.60. This figure is similar to the commonly-used P/E ratio, with the PEG ratio also factoring in a company's expected earnings growth rate. MLM currently has a PEG ratio of 1.91.
Another notable valuation metric for CX is its P/B ratio of 0.75. 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, MLM has a P/B of 3.19.
Based on these metrics and many more, CX holds a Value grade of A, while MLM has a Value grade of C.
CX stands above MLM thanks to its solid earnings outlook, and based on these valuation figures, we also feel that CX is the superior value option right now.
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Martin Marietta Materials, Inc. (MLM) : 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.
