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ASHTY vs. BOOM: Which Stock Should Value Investors Buy Now?


Investors interested in stocks from the Industrial Services sector have probably already heard of Ashtead Group PLC (ASHTY) and DMC Global (BOOM). 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.

We have found that the best way to discover great value opportunities is to pair a strong Zacks Rank with a great grade in the Value category of our Style Scores system. The Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.

Currently, Ashtead Group PLC has a Zacks Rank of #2 (Buy), while DMC Global has a Zacks Rank of #5 (Strong Sell). This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that ASHTY is likely seeing its earnings outlook improve to a greater extent. But this is only part of the picture for value investors.

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.

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.

ASHTY currently has a forward P/E ratio of 13.31, while BOOM has a forward P/E of 19.65. We also note that ASHTY has a PEG ratio of 0.89. 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. BOOM currently has a PEG ratio of 0.98.

Another notable valuation metric for ASHTY is its P/B ratio of 4.31. 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, BOOM has a P/B of 4.82.

Based on these metrics and many more, ASHTY holds a Value grade of B, while BOOM has a Value grade of D.

ASHTY 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 ASHTY is likely the superior value option right now.

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Zacks Investment Research
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