Investors interested in Building Products – Miscellaneous stocks are likely familiar with Titan America (TTAM) and Installed Building Products (IBP). 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 puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
Titan America and Installed Building Products are sporting Zacks Ranks of #2 (Buy) and #5 (Strong Sell), respectively, right now. This means that TTAM’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 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.
TTAM currently has a forward P/E ratio of 16.93, while IBP has a forward P/E of 22.10. We also note that TTAM has a PEG ratio of 1.18. This figure is similar to the commonly-used P/E ratio, with the PEG ratio also factoring in a company’s expected earnings growth rate. IBP currently has a PEG ratio of 5.25.
Another notable valuation metric for TTAM is its P/B ratio of 3.2. 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, IBP has a P/B of 9.11.
These metrics, and several others, help TTAM earn a Value grade of B, while IBP has been given a Value grade of D.
TTAM 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 TTAM is likely the superior value option right now.
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Titan America SA (TTAM) : Free Stock Analysis Report
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This article originally published on Zacks Investment Research (zacks.com).
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