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

Investors interested in Building Products - Heavy Construction stocks are likely familiar with 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.

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 is a proven strategy that targets companies with positive earnings estimate revision trends, while our Style Scores work to grade companies based on specific traits.

Right now, both Great Lakes Dredge & Dock and Dycom Industries are sporting a Zacks Rank of #1 (Strong Buy). The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that both of these companies have improving earnings outlooks. However, value investors will care about much more than just this.

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 Style Score Value grade factors in a variety of key fundamental metrics, including the popular P/E ratio, P/S ratio, earnings yield, cash flow per share, and a number of other key stats that are commonly used by value investors.

GLDD currently has a forward P/E ratio of 12.30, while DY has a forward P/E of 31.87. We also note that GLDD has a PEG ratio of 1.03. 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. DY currently has a PEG ratio of 1.76.

Another notable valuation metric for GLDD is its P/B ratio of 1.82. 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 6.66.

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

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.

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