Investors with an interest in Industrial Services stocks have likely encountered both SiteOne Landscape (SITE) and Fastenal (FAST). But which of these two stocks offers value investors a better bang for their buck right now? We'll need to 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.
Currently, SiteOne Landscape has a Zacks Rank of #2 (Buy), while Fastenal has a Zacks Rank of #3 (Hold). This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that SITE is likely seeing its earnings outlook improve to a greater extent. But this is only part of the picture for value investors.
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 Style Score Value grade factors in a variety of key fundamental metrics, including the popular P/E ratio, P/S ratio, earnings yield, cash flow per share, and a number of other key stats that are commonly used by value investors.
SITE currently has a forward P/E ratio of 34.73, while FAST has a forward P/E of 37.00. We also note that SITE has a PEG ratio of 1.90. This figure is similar to the commonly-used P/E ratio, with the PEG ratio also factoring in a company's expected earnings growth rate. FAST currently has a PEG ratio of 2.90.
Another notable valuation metric for SITE is its P/B ratio of 3.98. 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, FAST has a P/B of 13.11.
Based on these metrics and many more, SITE holds a Value grade of B, while FAST has a Value grade of D.
SITE has seen stronger estimate revision activity and sports more attractive valuation metrics than FAST, so it seems like value investors will conclude that SITE is the superior option right now.
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SiteOne Landscape Supply, Inc. (SITE) : Free Stock Analysis Report
Fastenal Company (FAST) : Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).
