NX or JHX: Which Is the Better Value Stock Right Now?
Investors looking for stocks in the Building Products - Miscellaneous sector might want to consider either Quanex Building Products (NX) or James Hardie (JHX). But which of these two stocks presents investors with the better value opportunity right now? 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, Quanex Building Products is sporting a Zacks Rank of #2 (Buy), while James Hardie has a Zacks Rank of #3 (Hold). Investors should feel comfortable knowing that NX likely has seen a stronger improvement to its earnings outlook than JHX has recently. But this is only part of the picture for value investors.
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.
NX currently has a forward P/E ratio of 12.58, while JHX has a forward P/E of 20.78. We also note that NX has a PEG ratio of 0.90. 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. JHX currently has a PEG ratio of 13.94.
Another notable valuation metric for NX is its P/B ratio of 1.32. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. For comparison, JHX has a P/B of 2.56.
These metrics, and several others, help NX earn a Value grade of A, while JHX has been given a Value grade of D.
NX sticks out from JHX in both our Zacks Rank and Style Scores models, so value investors will likely feel that NX is the better option right now.
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This article originally published on Zacks Investment Research (zacks.com).
