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 Wednesday, September 04, 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.

Builders FirstSource, Inc.’s Value Grade

Value Grade:

Builders FirstSource, Inc. is a supplier and manufacturer of building materials, manufactured components and construction services to professional homebuilders, sub-contractors, remodelers, and consumers. The Company offer an integrated solution to its customers by providing manufacturing, supply, and installation of a full range of structural and related building products. Its manufactured products include its factory-built roof and floor trusses, wall panels, vinyl windows, custom millwork, and trim, as well as engineered wood that it designs, cuts, and assembles specifically for each home. The Company’s full range of construction-related services include professional installation, turn-key framing, and shell constructions. The Company also assembles interior and exterior doors into pre-hung units. It supplies its customers with a broad offering of professional grade building products, such as dimensional lumber and lumber sheet goods and various window, and more.

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.

Builders FirstSource, Inc. has a Value Score of 64, which is considered to be undervalued.

When you look at Builders FirstSource, Inc.’s price-to-sales ratio at 1.18 compared to the industry median at 1.10, this company has a higher price relative to revenue compared to its peers. This could make Builders FirstSource, Inc.’s stock less attractive for value investors.

Builders FirstSource, Inc.’s price-earnings ratio is 14.81 compared to the industry median at 19.15. This means it has a lower share price relative to earnings compared to its peers. This could make Builders FirstSource, Inc. more attractive for value investors.

Now, let’s assess Builders FirstSource, Inc.’s EV/EBITDA ratio, also known as enterprise multiple. At 7.9, when compared to the industry median of 9.4, 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. Builders FirstSource, Inc.’s shareholder yield is higher than its industry median ratio of 1.34%. 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. Builders FirstSource, Inc.’s price-to-book ratio is higher than its industry median ratio of 2.41. This could make Builders FirstSource, Inc. less attractive to investors looking for a new addition to their portfolio.

Lastly, let’s take a look at Builders FirstSource, Inc.’s price-to-free-cash-flow ratio (P/FCF), which can indicate a company’s market value relative to its operating cash flow. Builders FirstSource, Inc.’s price-to-free-cash-flow ratio is lower than its industry median ratio of 13.94. This could make Builders FirstSource, Inc. more attractive because the lower P/FCF ratio indicates that Builders FirstSource, Inc. 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.

Gauzy Ltd’s Value Grade

Value Grade:

Gauzy Ltd is an Israel-based company that is primarily engaged in material science and nanotechnology. The Company is focused on development and production of LCG (Light Control Glass) in Polymer Dispersed Liquid Crystal (PDLC) or Suspended Particle Device (SPD) technology. The technology of the Company enables windows to dim and tint without losing the view through exterior windows. The Company manufactures its products for four sectors: Architecture, Automotive, Aeronautics, and Safety Tech. In the Architecture sector, the Company uses its glass technologies to build spaces. In the Automotive sector, the Company delivers glass technologies to passenger vehicles, agricultural & construction vehicles, railway, and marine. In the Aeronautics sector, the Company produces cabin and cockpit shading systems for commercial and business aircraft. In the Safety Tech sector, the Company designs Driver Protection Systems. The Firm operates in Israel as well as worldwide through its subsidiaries.

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.

Gauzy Ltd has a Value Score of 90, which is considered to be undervalued.

Gauzy Ltd’s price-to-book ratio is higher than its peers. This could make Gauzy Ltd less attractive for value investors when compared to the industry median at 2.41.

You can read more about Gauzy Ltd’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.

ZK International Group Co Ltd’s Value Grade

Value Grade:

ZK International Group Co Ltd is a China-based company principally engaged in the design and production of pipes and fittings, such as double-press thin-walled stainless steel tubes and fittings, carbon steel tubes and fittings and single-press tubes and fittings. The Company mainly operates its business through its subsidiary Zhejiang Zhengkang Industrial Co., Ltd. The Company’s products include steel strip, light gauge stainless steel pipe (LGSSP), pipe connections and fittings, fittings to change a pipe's direction, pipe fittings to connect two or more pipes, pipe fittings to change pipe size and pipe fitting tools. The Company’s products are used in a range of applications, including water and gas transmission within urban infrastructural development, residential housing development, oil and gas exploitation, and agricultural irrigation. The Company's products are primarily sold in China, and also exported and distributed in Europe, Africa and Southeast Asia.

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.

ZK International Group Co Ltd has a Value Score of 72, which is considered to be undervalued.

ZK International Group Co Ltd’s price-to-book ratio is higher than its peers. This could make ZK International Group Co Ltd less attractive for value investors when compared to the industry median at 2.41.

You can read more about ZK International Group Co Ltd’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.

• Builders FirstSource, Inc. stock has a Value Grade of B.
• Gauzy Ltd stock has a Value Grade of A.
• ZK International Group Co Ltd stock has a Value Grade of B.

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 Wednesday, September 04
• 3 Undervalued Construction Supplies & Fixtures Stocks for Tuesday, September 03
• Why Advanced Drainage Systems Inc’s (WMS) Stock Is Down 5.06%
• Why American Woodmark Corporation’s (AMWD) Stock Is Down 6.81%

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.