Investors interested in stocks from the Building Products - Miscellaneous sector have probably already heard of NWPX Infrastructure (NWPX) and Knife River (KNF). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.
There are plenty of strategies for discovering value stocks, but we have found that pairing a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system produces the best returns. The proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.
Currently, NWPX Infrastructure has a Zacks Rank of #2 (Buy), while Knife River has a Zacks Rank of #5 (Strong Sell). This means that NWPX'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 also tend to look at a number of traditional, tried-and-true figures to help them find stocks that they believe are undervalued at their 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.
NWPX currently has a forward P/E ratio of 16.82, while KNF has a forward P/E of 27.81. We also note that NWPX has a PEG ratio of 3.36. This popular figure is similar to the widely-used P/E ratio, but the PEG ratio also considers a company's expected EPS growth rate. KNF currently has a PEG ratio of 6.44.
Another notable valuation metric for NWPX is its P/B ratio of 1.26. 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, KNF has a P/B of 3.43.
Based on these metrics and many more, NWPX holds a Value grade of B, while KNF has a Value grade of F.
NWPX has seen stronger estimate revision activity and sports more attractive valuation metrics than KNF, so it seems like value investors will conclude that NWPX is the superior option right now.
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NWPX Infrastructure, Inc. (NWPX): Free Stock Analysis Report Knife River Corporation (KNF): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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