TGLS vs. FAST: Which Stock Is the Better Value Option?
Investors interested in stocks from the Building Products - Retail sector have probably already heard of Tecnoglass (TGLS) and Fastenal (FAST). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.
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.
Tecnoglass and Fastenal are sporting Zacks Ranks of #2 (Buy) and #3 (Hold), respectively, right now. Investors should feel comfortable knowing that TGLS likely has seen a stronger improvement to its earnings outlook than FAST has recently. But this is just one piece of the puzzle for value investors.
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 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.
TGLS currently has a forward P/E ratio of 10.70, while FAST has a forward P/E of 32.94. We also note that TGLS has a PEG ratio of 0.53. This figure is similar to the commonly-used P/E ratio, with the PEG ratio also factoring in a company's expected earnings growth rate. FAST currently has a PEG ratio of 3.66.
Another notable valuation metric for TGLS is its P/B ratio of 1.54. Investors use the P/B ratio to look at a stock's market value versus its book value, which is defined as total assets minus total liabilities. By comparison, FAST has a P/B of 9.87.
Based on these metrics and many more, TGLS holds a Value grade of A, while FAST has a Value grade of C.
TGLS is currently sporting an improving earnings outlook, which makes it stick out in our Zacks Rank model. And, based on the above valuation metrics, we feel that TGLS is likely the superior value option right now.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.