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Investors interested in stocks from the Industrial Services sector have probably already heard of Ashtead Group PLC (ASHTY) and W.W. Grainger (GWW). But which of these two stocks presents investors with the better value opportunity right now? Let's 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 favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.
Ashtead Group PLC has a Zacks Rank of #1 (Strong Buy), while W.W. Grainger has a Zacks Rank of #4 (Sell) right now. This means that ASHTY'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 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.
Our Value category highlights undervalued companies by looking at a variety of key metrics, including the popular P/E ratio, as well as the P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that have been used by value investors for years.
ASHTY currently has a forward P/E ratio of 16.45, while GWW has a forward P/E of 25.06. We also note that ASHTY has a PEG ratio of 1.54. 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. GWW currently has a PEG ratio of 2.66.
Another notable valuation metric for ASHTY is its P/B ratio of 3.72. Investors use the P/B ratio to look at a stock's market value versus its book value, which is defined as total assets minus total liabilities. By comparison, GWW has a P/B of 13.52.
Based on these metrics and many more, ASHTY holds a Value grade of B, while GWW has a Value grade of C.
ASHTY stands above GWW thanks to its solid earnings outlook, and based on these valuation figures, we also feel that ASHTY is the superior value option right now.
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Ashtead Group PLC (ASHTY) : Free Stock Analysis Report
W.W. Grainger, Inc. (GWW) : Free Stock Analysis Report