HCMLY or IBP: Which Is the Better Value Stock Right Now?

Investors looking for stocks in the Building Products - Miscellaneous sector might want to consider either Holcim Ltd Unsponsored ADR (HCMLY) or Installed Building Products (IBP). 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 proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.

Holcim Ltd Unsponsored ADR and Installed Building Products are sporting Zacks Ranks of #2 (Buy) and #3 (Hold), respectively, right now. This means that HCMLY's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. But this is just one factor that value investors are interested in.

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.

HCMLY currently has a forward P/E ratio of 23.41, while IBP has a forward P/E of 27.49. We also note that HCMLY has a PEG ratio of 2.22. 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. IBP currently has a PEG ratio of 6.61.

Another notable valuation metric for HCMLY is its P/B ratio of 3.17. 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, IBP has a P/B of 12.12.

These are just a few of the metrics contributing to HCMLY's Value grade of B and IBP's Value grade of D.

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

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

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