GIC vs. GWW: Which Stock Is the Better Value Option?

Investors interested in Industrial Services stocks are likely familiar with Global Industrial (GIC) and W.W. Grainger (GWW). 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.

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 proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.

Right now, Global Industrial is sporting a Zacks Rank of #1 (Strong Buy), while W.W. Grainger has a Zacks Rank of #4 (Sell). This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that GIC is likely seeing its earnings outlook improve to a greater extent. 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.

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.

GIC currently has a forward P/E ratio of 18.36, while GWW has a forward P/E of 24.94. We also note that GIC has a PEG ratio of 1.15. 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. GWW currently has a PEG ratio of 2.87.

Another notable valuation metric for GIC is its P/B ratio of 4.52. 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, GWW has a P/B of 11.66.

These metrics, and several others, help GIC earn a Value grade of B, while GWW has been given a Value grade of C.

GIC has seen stronger estimate revision activity and sports more attractive valuation metrics than GWW, so it seems like value investors will conclude that GIC is the superior option right now.

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This article originally published on Zacks Investment Research (zacks.com).

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