Investors with an interest in Industrial Services stocks have likely encountered both ScanSource (SCSC) and SiteOne Landscape (SITE). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.
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 emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.
Right now, ScanSource is sporting a Zacks Rank of #2 (Buy), while SiteOne Landscape has a Zacks Rank of #3 (Hold). This means that SCSC'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 analyze a variety of traditional, tried-and-true metrics to help find companies that they believe are undervalued at their 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.
SCSC currently has a forward P/E ratio of 10.04, while SITE has a forward P/E of 36.73. We also note that SCSC has a PEG ratio of 0.67. 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. SITE currently has a PEG ratio of 2.00.
Another notable valuation metric for SCSC is its P/B ratio of 0.98. Investors use the P/B ratio to look at a stock's market value versus its book value, which is defined as total assets minus total liabilities. By comparison, SITE has a P/B of 3.22.
These metrics, and several others, help SCSC earn a Value grade of A, while SITE has been given a Value grade of C.
SCSC 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 SCSC is likely the superior value option right now.
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ScanSource, Inc. (SCSC): Free Stock Analysis Report SiteOne Landscape Supply, Inc. (SITE): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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