URI or MAS: Which Is the Better Value Stock Right Now?
Investors looking for stocks in the Building Products - Miscellaneous sector might want to consider either United Rentals (URI) or Masco (MAS). But which of these two stocks offers value investors a better bang for their buck right now? We'll need to 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 emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.
Currently, both United Rentals and Masco are holding a Zacks Rank of # 2 (Buy). This means that both companies have witnessed positive earnings estimate revisions, so investors should feel comfortable knowing that both of these stocks have an improving earnings outlook. But this is just one piece of the puzzle for value investors.
Value investors are also interested in a number of tried-and-true valuation metrics that help show when 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.
URI currently has a forward P/E ratio of 11.55, while MAS has a forward P/E of 21.41. We also note that URI has a PEG ratio of 0.96. 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. MAS currently has a PEG ratio of 1.43.
Another notable valuation metric for URI is its P/B ratio of 3.25. The P/B ratio is used to compare a stock's market value with its book value, which is defined as total assets minus total liabilities. For comparison, MAS has a P/B of 407.79.
These metrics, and several others, help URI earn a Value grade of A, while MAS has been given a Value grade of C.
Both URI and MAS are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that URI is 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.