Investors looking for stocks in the Building Products - Heavy Construction sector might want to consider either MasTech (MTZ) or Dycom Industries (DY). 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 puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
Right now, MasTech is sporting a Zacks Rank of #1 (Strong Buy), while Dycom Industries has a Zacks Rank of #5 (Strong Sell). The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that MTZ has an improving earnings outlook. But this is just one piece of the puzzle for value investors.
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.
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.
MTZ currently has a forward P/E ratio of 13.92, while DY has a forward P/E of 20.35. We also note that MTZ has a PEG ratio of 0.99. 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. DY currently has a PEG ratio of 1.65.
Another notable valuation metric for MTZ is its P/B ratio of 2.99. 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, DY has a P/B of 3.93.
Based on these metrics and many more, MTZ holds a Value grade of A, while DY has a Value grade of C.
MTZ 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 MTZ is likely the superior value option right now.