ROCK or AGX: Which Is the Better Value Stock Right Now?
Investors looking for stocks in the Building Products - Miscellaneous sector might want to consider either Gibraltar Industries (ROCK) or Argan (AGX). But which of these two stocks presents investors with the better value opportunity right now? 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 Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.
Gibraltar Industries has a Zacks Rank of #2 (Buy), while Argan 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 ROCK is likely seeing its earnings outlook improve to a greater extent. However, value investors will care about much more than just this.
Value investors also tend to look at a number of traditional, tried-and-true figures to help them find stocks that they believe are undervalued at their 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.
ROCK currently has a forward P/E ratio of 10.34, while AGX has a forward P/E of 27.01. We also note that ROCK has a PEG ratio of 0.69. 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. AGX currently has a PEG ratio of 2.70.
Another notable valuation metric for ROCK 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, AGX has a P/B of 9.99.
These are just a few of the metrics contributing to ROCK's Value grade of A and AGX's Value grade of C.
ROCK stands above AGX thanks to its solid earnings outlook, and based on these valuation figures, we also feel that ROCK is the superior value option right now.
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Argan, Inc. (AGX) : Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).
