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

Investors with an interest in Building Products - Heavy Construction stocks have likely encountered both Great Lakes Dredge & Dock (GLDD) and 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.

Everyone has their own methods for finding great value opportunities, but our model includes pairing an impressive grade in the Value category of our Style Scores system with a strong Zacks Rank. The Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.

Great Lakes Dredge & Dock and Dycom Industries are both sporting a Zacks Rank of #2 (Buy) right now. This means that both companies have witnessed positive earnings estimate revisions, so investors should feel comfortable knowing that both of these stocks have an improving earnings outlook. 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 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.

GLDD currently has a forward P/E ratio of 11.21, while DY has a forward P/E of 28.61. We also note that GLDD has a PEG ratio of 0.93. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. DY currently has a PEG ratio of 1.37.

Another notable valuation metric for GLDD is its P/B ratio of 1.61. 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, DY has a P/B of 6.05.

Based on these metrics and many more, GLDD holds a Value grade of A, while DY has a Value grade of C.

Both GLDD and DY are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that GLDD is the superior value option right now.

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

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