Investors looking for stocks in the Building Products - Heavy Construction sector might want to consider either Emcor Group (EME) or Dycom Industries (DY). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.
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.
Right now, Emcor Group is sporting a Zacks Rank of #2 (Buy), while Dycom Industries has a Zacks Rank of #4 (Sell). Investors should feel comfortable knowing that EME likely has seen a stronger improvement to its earnings outlook than DY has recently. However, value investors will care about much more than just this.
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 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.
EME currently has a forward P/E ratio of 13.03, while DY has a forward P/E of 15.35. We also note that EME has a PEG ratio of 0.87. 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. DY currently has a PEG ratio of 1.81.
Another notable valuation metric for EME is its P/B ratio of 2.20. 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, DY has a P/B of 2.42.
These metrics, and several others, help EME earn a Value grade of A, while DY has been given a Value grade of C.
EME 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 EME is likely the superior value option right now.
EMCOR Group, Inc. (EME): Free Stock Analysis Report
Dycom Industries, Inc. (DY): Free Stock Analysis Report
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