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Investors interested in stocks from the Building Products - Miscellaneous sector have probably already heard of Holcim Ltd Unsponsored ADR (HCMLY) and James Hardie (JHX). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.
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.
Right now, Holcim Ltd Unsponsored ADR is sporting a Zacks Rank of #2 (Buy), while James Hardie has a Zacks Rank of #4 (Sell). This means that HCMLY's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. But this is only part of the picture for value investors.
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 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.
HCMLY currently has a forward P/E ratio of 14.38, while JHX has a forward P/E of 24.84. We also note that HCMLY has a PEG ratio of 1.96. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. JHX currently has a PEG ratio of 3.75.
Another notable valuation metric for HCMLY is its P/B ratio of 1.86. 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, JHX has a P/B of 8.18.
These are just a few of the metrics contributing to HCMLY's Value grade of A and JHX's Value grade of C.
HCMLY stands above JHX thanks to its solid earnings outlook, and based on these valuation figures, we also feel that HCMLY is the superior value option right now.
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Holcim Ltd Unsponsored ADR (HCMLY) : Free Stock Analysis Report
James Hardie Industries PLC. (JHX) : Free Stock Analysis Report