Investors looking for stocks in the Building Products - Miscellaneous sector might want to consider either Construction Partners (ROAD) or GCP Applied Technologies (GCP). 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 Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.
Currently, Construction Partners has a Zacks Rank of #2 (Buy), while GCP Applied Technologies has a Zacks Rank of #5 (Strong Sell). Investors should feel comfortable knowing that ROAD likely has seen a stronger improvement to its earnings outlook than GCP has recently. But this is only part of the picture 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 grades stocks based on a number of key metrics, including the tried-and-true P/E ratio, the P/S ratio, earnings yield, and cash flow per share, as well as a variety of other fundamentals that value investors frequently use.
ROAD currently has a forward P/E ratio of 10.86, while GCP has a forward P/E of 28.19. We also note that ROAD has a PEG ratio of 1.09. 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. GCP currently has a PEG ratio of 1.57.
Another notable valuation metric for ROAD is its P/B ratio of 2.17. 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, GCP has a P/B of 4.26.
These are just a few of the metrics contributing to ROAD's Value grade of A and GCP's Value grade of F.
ROAD stands above GCP thanks to its solid earnings outlook, and based on these valuation figures, we also feel that ROAD is the superior value option right now.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Construction Partners, Inc. (ROAD): Free Stock Analysis Report
GCP Applied Technologies Inc. (GCP): Free Stock Analysis Report
To read this article on Zacks.com click here.
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.
