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GMS or FAST: Which Is the Better Value Stock Right Now?

Investors interested in Building Products - Retail stocks are likely familiar with GMS Inc. (GMS) and Fastenal (FAST). But which of these two companies is the best option for those looking for undervalued stocks? Let's take a closer look.

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 proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.

Right now, both GMS Inc. and Fastenal are sporting a Zacks Rank of # 2 (Buy). The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that both of these companies have improving earnings outlooks. But this is only part of the picture for value investors.

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.

GMS currently has a forward P/E ratio of 7.76, while FAST has a forward P/E of 23.26. We also note that GMS has a PEG ratio of 1.11. This popular figure is similar to the widely-used P/E ratio, but the PEG ratio also considers a company's expected EPS growth rate. FAST currently has a PEG ratio of 1.66.

Another notable valuation metric for GMS is its P/B ratio of 1.82. 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, FAST has a P/B of 7.67.

These metrics, and several others, help GMS earn a Value grade of A, while FAST has been given a Value grade of D.

Both GMS and FAST are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that GMS is the superior value option right now.

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Fastenal Company (FAST): 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.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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