GLDD or DY: Which Is the Better Value Stock Right Now?

Investors looking for stocks in the Building Products - Heavy Construction sector might want to consider either Great Lakes Dredge & Dock (GLDD) or Dycom Industries (DY). 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.

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 Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.

Great Lakes Dredge & Dock has a Zacks Rank of #1 (Strong Buy), while Dycom Industries has a Zacks Rank of #3 (Hold) right now. The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that GLDD has an improving earnings 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.

GLDD currently has a forward P/E ratio of 11.73, while DY has a forward P/E of 26.50. We also note that GLDD has a PEG ratio of 0.98. 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. DY currently has a PEG ratio of 1.27.

Another notable valuation metric for GLDD is its P/B ratio of 1.68. 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, DY has a P/B of 5.44.

These are just a few of the metrics contributing to GLDD's Value grade of A and DY's Value grade of C.

GLDD stands above DY thanks to its solid earnings outlook, and based on these valuation figures, we also feel that GLDD is the superior value option right now.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

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

Zacks Investment Research