Investors interested in Building Products - Wood stocks are likely familiar with Boise Cascade (BCC) and Trex (TREX). But which of these two companies is the best option for those looking for undervalued stocks? Let's take a closer look.
The best way to find great value stocks is to pair a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system. 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.
Boise Cascade has a Zacks Rank of #1 (Strong Buy), while Trex has a Zacks Rank of #3 (Hold) right now. This means that BCC'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 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.
BCC currently has a forward P/E ratio of 16.41, while TREX has a forward P/E of 33.43. We also note that BCC has a PEG ratio of 1.99. 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. TREX currently has a PEG ratio of 3.34.
Another notable valuation metric for BCC is its P/B ratio of 2.04. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. For comparison, TREX has a P/B of 12.79.
Based on these metrics and many more, BCC holds a Value grade of A, while TREX has a Value grade of F.
BCC 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 BCC is likely the superior value option right now.
Boise Cascade, L.L.C. (BCC): Free Stock Analysis Report
Trex Company, Inc. (TREX): Free Stock Analysis Report
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