ROCK vs. ROAD: Which Stock Should Value Investors Buy Now?

Investors with an interest in Building Products - Miscellaneous stocks have likely encountered both Gibraltar Industries (ROCK) and Construction Partners (ROAD). 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 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.

Currently, Gibraltar Industries has a Zacks Rank of #2 (Buy), while Construction Partners has a Zacks Rank of #3 (Hold). Investors should feel comfortable knowing that ROCK likely has seen a stronger improvement to its earnings outlook than ROAD has recently. But this is just one piece of the puzzle for value investors.

Value investors analyze a variety of traditional, tried-and-true metrics to help find companies that they believe are undervalued at their 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.

ROCK currently has a forward P/E ratio of 12.10, while ROAD has a forward P/E of 37.18. We also note that ROCK has a PEG ratio of 0.81. 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. ROAD currently has a PEG ratio of 1.05.

Another notable valuation metric for ROCK is its P/B ratio of 1.55. 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, ROAD has a P/B of 6.09.

These are just a few of the metrics contributing to ROCK's Value grade of B and ROAD's Value grade of C.

ROCK 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 ROCK is likely the superior value option right now.

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This article originally published on Zacks Investment Research (zacks.com).

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