Based on key financial metrics such as the price-to-sales ratio, shareholder yield and the price-earnings ratio, the following 3 stocks made the list for top value stocks in the Construction Supplies & Fixtures industry. Those looking for value stocks to add to their portfolio may want to use this list as a starting point for further investment research.

Why Focus on Undervalued Construction Supplies & Fixtures Stocks?

Value investors seek to buy stocks at a discount to their intrinsic value. Long-term returns show that such strategies are advantageous. Value stocks, as a group, tend to outperform growth stocks over extended periods of time. Typically, value investors perform financial analysis of numerous metrics, don’t follow the herd and are long-term investors.

AAII’s A+ Investor Value Grade is derived from a stock’s Value Score. The Value Score is the percentile rank of the average of the percentile ranks of the price-to-sales ratio, price-earnings ratio, enterprise-value-to-EBITDA (EV/EBITDA) ratio, shareholder yield, price-to-book-value ratio and price-to-free-cash-flow ratio. The score is variable, meaning it can consider all six ratios or, should any of the six ratios not be valid, the remaining ratios that are valid. To be assigned a Value Score, stocks must have a valid (non-null) ratio and corresponding ranking for at least two of the six valuation ratios.

What Goes Into AAII’s Value Grade?

Stock evaluation requires access to huge amounts of data as well as the knowledge and time to sift through it all, make sense of financial ratios, read income statements and analyze recent stock movement. AAII created A+ Investor, a robust data suite that condenses data research in an actionable and customizable way suitable for investors of all knowledge levels, to help investors with that task.

AAII’s proprietary stock grades come with A+ Investor. These offer intuitive A–F grades for more than just value. It is possible for a stock to appear cheap based on one valuation metric but appear expensive on another. It is also possible for one valuation ratio to be associated with outperforming stocks during certain periods of time but not others. Some stocks may even have null values for certain metrics like the price-earnings ratio or the price-to-book ratio but not others. An example of this would be a company with losses instead of profits or a negative book value because of heavy borrowing. Negative earnings or book value result in non-meaningful ratios that are left blank or null.

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3 Undervalued Construction Supplies & Fixtures Stocks

Of course, there are countless value stocks that are worth mentioning, but this is a concise list of the top 3 undervalued stocks in the Construction Supplies & Fixtures industry for Thursday, May 09, 2024. Let’s take a closer look at their individual scores to see how they measure up against each other and the Construction Supplies & Fixtures industry median.

The Value Grade is assigned based on how each stock’s composite valuation compares to all other stocks.

The process for assigning grades starts with each variable for a given stock. The percentile rankings for all valid ratios that a stock has are calculated. So, for instance, a stock could have a price-to-book ranking in the 43rd percentile, a price-earnings ranking in the 67th percentile, a price-to-sales ranking in the 23rd percentile, etc. Then, those rankings are averaged for each stock. (A minimum of two valid variables are required, though all six will be used if available.)

Once the average of the individual variables is calculated, that average is ranked against all stocks. Put another way, each stock’s composite valuation is compared to all other stocks. These ranks are then sorted into quintiles from the cheapest 20% (a grade of A) to the most expensive 20% (a grade of F).

As always, we recommend that you conduct proper due diligence and research before investing in any security. We also suggest that investors utilize numerous grades, not just value, when it comes to deciding whether a company is a good fit for their allocation needs.

American Woodmark Corporation’s Value Grade

Value Grade:

American Woodmark Corporation manufactures and distributes kitchen, bath, and home organization products for the remodeling and new home construction markets. It offers a variety of products that fall into product lines, including kitchen cabinetry, bath cabinetry, office cabinetry, home organization and hardware. Its cabinetry products are available in a variety of designs, finishes and finish colors and door styles. It offers products in categories, such as made-to-order and stock. Made-to-order products utilize higher grade materials with more options as compared to stock and are all specially ordered and shipped directly to the home from the factory. Its home organization products are stock products. Its kitchen cabinetry and bath cabinetry are offered across all product categories (made-to-order and stock). Its stock products represent cash and carry products and are sold through home centers, while its made-to-order products are sold through home centers, builders, and others.

Stocks with a Value Score from 81 to 100 are considered deep value, those with a score between 61 and 80 are value and so on.

American Woodmark Corporation has a Value Score of 83, which is considered to be undervalued.

When you look at American Woodmark Corporation’s price-to-sales ratio at 0.79 compared to the industry median at 1.14, this company has a lower price relative to revenue compared to its peers. This could make American Woodmark Corporation’s stock more attractive for value investors.

American Woodmark Corporation’s price-earnings ratio is 12.86 compared to the industry median at 20.90. This means it has a lower share price relative to earnings compared to its peers. This could make American Woodmark Corporation more attractive for value investors.

Now, let’s assess American Woodmark Corporation’s EV/EBITDA ratio, also known as enterprise multiple. At 6.8, when compared to the industry median of 9.1, the company may be considered undervalued in relation to its peers. Value investors could use the enterprise multiple to identify stocks that are considered overvalued or undervalued relative to their industry.

Shareholder yield is the sum of a stock’s dividend yield (paid over previous 12 months minus special dividends) and the percentage of net share buybacks over the previous 12 months. American Woodmark Corporation’s shareholder yield is higher than its industry median ratio of 1.60%. Value investors may look for an attractive shareholder yield because it can be a powerful tool for identifying if the company has a good management team.

As one of the most common value metrics, the price-to-book ratio evaluates a company’s current market price relative to its book value. American Woodmark Corporation’s price-to-book ratio is lower than its industry median ratio of 2.92. This could make American Woodmark Corporation more attractive to investors looking for a new addition to their portfolio.

Lastly, let’s take a look at American Woodmark Corporation’s price-to-free-cash-flow ratio (P/FCF), which can indicate a company’s market value relative to its operating cash flow. American Woodmark Corporation’s price-to-free-cash-flow ratio is lower than its industry median ratio of 13.28. This could make American Woodmark Corporation more attractive because the lower P/FCF ratio indicates that American Woodmark Corporation is undervalued. The P/FCF ratio metric can also be viewed over a long-term time frame to see if the company's cash flow to share price value is generally improving or worsening.

Fletcher Building Ltd (ADR)’s Value Grade

Value Grade:

Fletcher Building Limited is a New Zealand-based employer, manufacturer, home builder and partner on construction and infrastructure projects. Its segments include Building Products, Distribution, Concrete, Australia, Residential and Development, and Construction. Building Products segment is a manufacturer, distributor and marketer of building products used in the residential, industrial and commercial markets in New Zealand. Distribution segment consists of building and plumbing product distribution businesses in New Zealand. Concrete segment includes its interests in the concrete value chain, including extraction of aggregates, and the production of cement, concrete and concrete products. Australia segment manufactures and distributes building materials for a range of industries across Australia. Residential and Development segment involves building and sale of residential homes in New Zealand and development and sale of commercial and residential land in Australia and New Zealand.

Stocks with a Value Score from 81 to 100 are considered deep value, those with a score between 61 and 80 are value and so on.

Fletcher Building Ltd (ADR) has a Value Score of 76, which is considered to be undervalued.

Fletcher Building Ltd (ADR)’s price-earnings ratio is 148.5 compared to the industry median at 20.9. This means that it has a higher price relative to its earnings compared to its peers. This makes Fletcher Building Ltd (ADR) less attractive for value investors.

Fletcher Building Ltd (ADR)’s price-to-book ratio is higher than its peers. This could make Fletcher Building Ltd (ADR) less attractive for value investors when compared to the industry median at 2.92.

You can read more about Fletcher Building Ltd (ADR)’s key financial metrics like shareholder yield, price-to-free-cash-flow and EV/EBITDA ratio, or learn more about its Momentum and Growth Grades, by subscribing to A+ Investor.

MasterBrand Inc’s Value Grade

Value Grade:

MasterBrand, Inc. is a manufacturer of residential cabinets in North America and offers a comprehensive portfolio of residential cabinetry products for the kitchen, bathroom and other parts of the home. The Company's products are available in a variety of designs, finishes and styles and span various categories of the cabinets market, such as stock, semi-custom and premium cabinetry. The Company's products are sold throughout the United States and Canada to the remodeling and new construction markets through three primary channels: dealers, retailers and builders. Its retail sales occur in-store and through various e-commerce channels, including its retail channel partners' online presence. The Company partners with regional and large-scale builders for single-family construction throughout North America, serving them directly or through a distribution network, allowing it to customize its service to each builder's requirements. The Company's brands include Mantra, Diamond and Omega.

Stocks with a Value Score from 81 to 100 are considered deep value, those with a score between 61 and 80 are value and so on.

MasterBrand Inc has a Value Score of 82, which is considered to be undervalued.

MasterBrand Inc’s price-earnings ratio is 11.7 compared to the industry median at 20.9. This means that it has a lower price relative to its earnings compared to its peers. This makes MasterBrand Inc more attractive for value investors.

MasterBrand Inc’s price-to-book ratio is higher than its peers. This could make MasterBrand Inc less attractive for value investors when compared to the industry median at 2.92.

You can read more about MasterBrand Inc’s key financial metrics like shareholder yield, price-to-free-cash-flow and EV/EBITDA ratio, or learn more about its Momentum and Growth Grades, by subscribing to A+ Investor.

Other Construction Supplies & Fixtures Stock Grades

Value is just one of the five Stock Grades included in our A+ Investor service. AAII members can see the top-graded stocks—those with grades of A or B for value, growth, momentum, earnings estimate revisions and quality—on the A+ Stock Grades Screener.

Also, if you want full access to all of AAII’s premium services, you can subscribe to one convenient bundled plan called AAII Platinum where you can try out A+ Investor, AAII Dividend Investing, the Stock Superstars Report, Growth Investing and VMQ Stocks. With the other premium services, you can dive deep into additional metrics, portfolios, commentary and information about Construction Supplies & Fixtures stocks as well as other industrys.

Choosing Which of the 3 Best Construction Supplies & Fixtures Stocks Is Right for You

Choosing which value stocks to invest in will ultimately depend on your individual goals and allocation; however, comparing similar value stocks in the same industry can help you analyze which might be better investments for you in the long run. So, let’s take a look at the Value Grade for all of our stocks.

• American Woodmark Corporation stock has a Value Grade of A.
• Fletcher Building Ltd (ADR) stock has a Value Grade of B.
• MasterBrand Inc stock has a Value Grade of A.

Now that you have a bit more background about each of the 3 undervalued stocks in the Construction Supplies & Fixtures industry as well as their overall grades, it’s time for you to conduct additional research to see if these could fit your portfolio needs based on your goals and risk tolerance. AAII can help you figure out both and identify which investments align with what works best for you.

We do so through a program of education that teaches you to invest for yourself and become an effective manager of your own wealth—no more relying on others for your financial independence. You can rely on AAII for timeless articles on financial planning and stock-picking, unbiased research and actionable analysis that makes you a better investor.

A+ Investor adds to that qualitative teaching by giving you a powerful data suite that helps you whittle down investment decisions to find stocks, exchange-traded funds (ETFs) or mutual funds that meet your needs.

Additional Resources About Construction Supplies & Fixtures Stocks

Want to learn more about Construction Supplies & Fixtures stocks to see if they could be the right investment for you? Check out some additional resources and articles to help you on your financial journey.

• 3 Undervalued Construction Supplies & Fixtures Stocks for Thursday, May 09
• 4 Undervalued Construction Supplies & Fixtures Stocks for Wednesday, May 08
• What You Need to Know About Griffon Corp's Q2 Earnings
• Why Caesarstone Ltd’s (CSTE) Stock Is Down 10.14%

AAII Disclaimer

We make no representations or warranties that any investor will, or is likely to, achieve profits similar to those shown, because past, hypothetical or simulated performance is not necessarily indicative of future results. Before making an investment decision, you should consider your circumstances and whether the information on our content is applicable to your situation. This information was prepared in good faith and we accept no liability for any errors or omissions. The full disclaimer can be read here.