Investors with an interest in Building Products - Miscellaneous stocks have likely encountered both Heidelberg Materials AG Unsponsored ADR (HDLMY) and Construction Partners (ROAD). But which of these two stocks presents investors with the better value opportunity right now? Let's take a closer look.
We have found that the best way to discover great value opportunities is to pair a strong Zacks Rank with a great grade in the Value category of our Style Scores system. 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, both Heidelberg Materials AG Unsponsored ADR and Construction Partners are holding a Zacks Rank of #2 (Buy). Investors should feel comfortable knowing that both of these stocks have an improving earnings outlook since the Zacks Rank favors companies that have witnessed positive analyst estimate revisions. However, value investors will care about much more than just this.
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 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.
HDLMY currently has a forward P/E ratio of 15.88, while ROAD has a forward P/E of 48.55. We also note that HDLMY has a PEG ratio of 1.23. 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. ROAD currently has a PEG ratio of 1.31.
Another notable valuation metric for HDLMY is its P/B ratio of 2.16. 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, ROAD has a P/B of 7.3.
These metrics, and several others, help HDLMY earn a Value grade of B, while ROAD has been given a Value grade of C.
Both HDLMY and ROAD are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that HDLMY is the superior value option right now.
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Heidelberg Materials AG Unsponsored ADR (HDLMY): Free Stock Analysis Report Construction Partners, Inc. (ROAD): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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