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CBPX or AWI: Which Is the Better Value Stock Right Now?


Investors interested in stocks from the Building Products – Miscellaneous sector have probably already heard of Continental Building Products (CBPX) and Armstrong World Industries (AWI). 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 proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.

Currently, Continental Building Products has a Zacks Rank of #2 (Buy), while Armstrong World Industries has a Zacks Rank of #3 (Hold). This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that CBPX is likely seeing its earnings outlook improve to a greater extent. But this is only part of the picture for value investors.

Value investors are also interested in a number of tried-and-true valuation metrics that help show when 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.

CBPX currently has a forward P/E ratio of 11.09, while AWI has a forward P/E of 14.45. We also note that CBPX has a PEG ratio of 0.79. 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. AWI currently has a PEG ratio of 0.82.

Another notable valuation metric for CBPX is its P/B ratio of 2.78. 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, AWI has a P/B of 9.47.

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

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

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