URI vs. AWI: Which Stock Is the Better Value Option?
Investors interested in Building Products - Miscellaneous stocks are likely familiar with United Rentals (URI) and Armstrong World Industries (AWI). 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.
Right now, United Rentals is sporting a Zacks Rank of #1 (Strong Buy), while Armstrong World Industries has a Zacks Rank of #2 (Buy). This means that URI'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 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.
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.
URI currently has a forward P/E ratio of 12.87, while AWI has a forward P/E of 17.97. We also note that URI has a PEG ratio of 1.07. 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. AWI currently has a PEG ratio of 5.03.
Another notable valuation metric for URI is its P/B ratio of 3.11. 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 9.74.
These metrics, and several others, help URI earn a Value grade of A, while AWI has been given a Value grade of C.
URI 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 URI is likely the superior value option right now.
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United Rentals, Inc. (URI): Free Stock Analysis Report
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