SWIM vs. AWI: Which Stock Is the Better Value Option?

Investors interested in Building Products - Miscellaneous stocks are likely familiar with Latham Group (SWIM) and Armstrong World Industries (AWI). 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 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, Latham Group is sporting a Zacks Rank of #2 (Buy), while Armstrong World Industries has a Zacks Rank of #3 (Hold). The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that SWIM has an improving earnings outlook. 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 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.

SWIM currently has a forward P/E ratio of 13.83, while AWI has a forward P/E of 18.46. We also note that SWIM has a PEG ratio of 0.30. 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. AWI currently has a PEG ratio of 1.03.

Another notable valuation metric for SWIM is its P/B ratio of 4.40. 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, AWI has a P/B of 8.63.

Based on these metrics and many more, SWIM holds a Value grade of B, while AWI has a Value grade of C.

SWIM sticks out from AWI in both our Zacks Rank and Style Scores models, so value investors will likely feel that SWIM is the better option right now.

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