Investors interested in stocks from the Building Products - Miscellaneous sector have probably already heard of Titan America (TTAM) and 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 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.
Titan America and Installed Building Products are both sporting a Zacks Rank of #2 (Buy) right now. Investors should feel comfortable knowing that both of these stocks have an improving earnings outlook since the Zacks Rank favors companies that have witnessed positive analyst estimate revisions. But this is just one factor that value investors are interested in.
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 grades stocks based on a number of key metrics, including the tried-and-true P/E ratio, the P/S ratio, earnings yield, and cash flow per share, as well as a variety of other fundamentals that value investors frequently use.
TTAM currently has a forward P/E ratio of 14.65, while IBP has a forward P/E of 22.55. We also note that TTAM has a PEG ratio of 1.02. 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 5.17.
Another notable valuation metric for TTAM is its P/B ratio of 2.7. The P/B ratio is used to compare a stock's market value with its book value, which is defined as total assets minus total liabilities. For comparison, IBP has a P/B of 9.3.
These metrics, and several others, help TTAM earn a Value grade of A, while IBP has been given a Value grade of C.
Both TTAM and IBP are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that TTAM is the superior value option right now.
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