UFPI vs. TREX: Which Stock Is the Better Value Option?
Investors interested in Building Products - Wood stocks are likely familiar with Universal Forest Products (UFPI) and Trex (TREX). 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.
Currently, Universal Forest Products has a Zacks Rank of #2 (Buy), while Trex has a Zacks Rank of #3 (Hold). This means that UFPI's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. But this is only part of the picture for value investors.
Value investors analyze a variety of traditional, tried-and-true metrics to help find companies that they believe are undervalued at their 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.
UFPI currently has a forward P/E ratio of 14.03, while TREX has a forward P/E of 35.29. We also note that UFPI has a PEG ratio of 2.81. 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. TREX currently has a PEG ratio of 3.53.
Another notable valuation metric for UFPI is its P/B ratio of 2.08. 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, TREX has a P/B of 12.53.
These metrics, and several others, help UFPI earn a Value grade of A, while TREX has been given a Value grade of D.
UFPI has seen stronger estimate revision activity and sports more attractive valuation metrics than TREX, so it seems like value investors will conclude that UFPI is the superior option right now.
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Universal Forest Products, Inc. (UFPI): Free Stock Analysis Report
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