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Investors looking for stocks in the Building Products - Retail sector might want to consider either Lumber Liquidators Holdings (LL) or Fastenal (FAST). 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 emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.
Lumber Liquidators Holdings and Fastenal are sporting Zacks Ranks of #2 (Buy) and #3 (Hold), respectively, right now. Investors should feel comfortable knowing that LL likely has seen a stronger improvement to its earnings outlook than FAST has recently. However, value investors will care about much more than just this.
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.
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.
LL currently has a forward P/E ratio of 5.24, while FAST has a forward P/E of 23.57. We also note that LL has a PEG ratio of 0.19. 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. FAST currently has a PEG ratio of 1.68.
Another notable valuation metric for LL is its P/B ratio of 0.71. 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, FAST has a P/B of 7.21.
These are just a few of the metrics contributing to LL's Value grade of B and FAST's Value grade of F.
LL stands above FAST thanks to its solid earnings outlook, and based on these valuation figures, we also feel that LL is the superior value option right now.
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