Investors with an interest in Industrial Services stocks have likely encountered both Global Industrial (GIC) and W.W. Grainger (GWW). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.
Everyone has their own methods for finding great value opportunities, but our model includes pairing an impressive grade in the Value category of our Style Scores system with a strong Zacks Rank. The Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.
Global Industrial and W.W. Grainger are sporting Zacks Ranks of #2 (Buy) and #3 (Hold), respectively, right now. This means that GIC'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 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.
The Value category of the Style Scores system identifies undervalued companies by looking at a number of key metrics. These include the long-favored P/E ratio, P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that help us determine a company's fair value.
GIC currently has a forward P/E ratio of 19.08, while GWW has a forward P/E of 29.63. We also note that GIC has a PEG ratio of 1.19. 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. GWW currently has a PEG ratio of 2.43.
Another notable valuation metric for GIC is its P/B ratio of 4.94. 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, GWW has a P/B of 14.32.
These metrics, and several others, help GIC earn a Value grade of B, while GWW has been given a Value grade of D.
GIC sticks out from GWW in both our Zacks Rank and Style Scores models, so value investors will likely feel that GIC is the better option right now.
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Global Industrial Company (GIC) : Free Stock Analysis Report
W.W. Grainger, Inc. (GWW) : Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).
