ROCK or WMS: Which Is the Better Value Stock Right Now?
Investors with an interest in Building Products - Miscellaneous stocks have likely encountered both Gibraltar Industries (ROCK) and Advanced Drainage Systems (WMS). But which of these two companies is the best option for those looking for undervalued stocks? Let's take a closer look.
Everyone has their own methods for finding great value opportunities, but our model includes pairing an impressive grade in the Value category of our Style Scores system with a strong Zacks Rank. The Zacks Rank is a proven strategy that targets companies with positive earnings estimate revision trends, while our Style Scores work to grade companies based on specific traits.
Right now, Gibraltar Industries is sporting a Zacks Rank of #2 (Buy), while Advanced Drainage Systems has a Zacks Rank of #3 (Hold). This means that ROCK's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. However, value investors will care about much more than just this.
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.
ROCK currently has a forward P/E ratio of 13.22, while WMS has a forward P/E of 22.68. We also note that ROCK has a PEG ratio of 0.88. 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. WMS currently has a PEG ratio of 1.60.
Another notable valuation metric for ROCK is its P/B ratio of 1.69. 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, WMS has a P/B of 6.26.
These are just a few of the metrics contributing to ROCK's Value grade of A and WMS's Value grade of C.
ROCK sticks out from WMS in both our Zacks Rank and Style Scores models, so value investors will likely feel that ROCK is the better option right now.
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Advanced Drainage Systems, Inc. (WMS) : Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).
