Investors interested in stocks from the Building Products - Miscellaneous sector have probably already heard of Quanex Building Products (NX) and Holcim Ltd Unsponsored ADR (HCMLY). 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.
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.
Quanex Building Products has a Zacks Rank of #2 (Buy), while Holcim Ltd Unsponsored ADR has a Zacks Rank of #5 (Strong Sell) right now. This means that NX'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 grades stocks based on a number of key metrics, including the tried-and-true P/E ratio, the P/S ratio, earnings yield, and cash flow per share, as well as a variety of other fundamentals that value investors frequently use.
NX currently has a forward P/E ratio of 7.51, while HCMLY has a forward P/E of 20.82. We also note that NX has a PEG ratio of 0.54. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. HCMLY currently has a PEG ratio of 2.07.
Another notable valuation metric for NX is its P/B ratio of 0.9. 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, HCMLY has a P/B of 1.44.
Based on these metrics and many more, NX holds a Value grade of A, while HCMLY has a Value grade of C.
NX 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 NX is likely the superior value option right now.
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Quanex Building Products Corporation (NX): Free Stock Analysis Report Holcim Ltd Unsponsored ADR (HCMLY): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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