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MARKETS LIVE BLOG:

STOCKS RISE, LED BY STELLAR ALPHABET, MICROSOFT RESULTS

Chevron, Exxon under pressure as falling natural gas prices hit earnings

CX vs. MLM: Which Stock Is the Better Value Option?

Zacks Equity Research
·2 min read

Investors looking for stocks in the Building Products - Concrete and Aggregates sector might want to consider either Cemex (CX) or Martin Marietta (MLM). But which of these two companies is the best option for those looking for undervalued stocks? Let's take a closer look.

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 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, Cemex has a Zacks Rank of #2 (Buy), while Martin Marietta has a Zacks Rank of #3 (Hold). This means that CX'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 analyze a variety of traditional, tried-and-true metrics to help find companies that they believe are undervalued at their current share price levels.

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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.

CX currently has a forward P/E ratio of 6.36, while MLM has a forward P/E of 22.92. We also note that CX has a PEG ratio of 0.52. 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. MLM currently has a PEG ratio of 1.36.

Another notable valuation metric for CX is its P/B ratio of 0.56. 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, MLM has a P/B of 2.99.

These are just a few of the metrics contributing to CX's Value grade of A and MLM's Value grade of C.

CX sticks out from MLM in both our Zacks Rank and Style Scores models, so value investors will likely feel that CX is the better option right now.


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Cemex S.A.B. de C.V. (CX) : Free Stock Analysis Report
 
Martin Marietta Materials, Inc. (MLM) : Free Stock Analysis Report
 
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Zacks Investment Research