Investors looking for stocks in the Building Products - Miscellaneous sector might want to consider either Quanex Building Products (NX) or Construction Partners (ROAD). But which of these two companies is the best option for those looking for undervalued stocks? Let's 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 proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.

Quanex Building Products has a Zacks Rank of #1 (Strong Buy), while Construction Partners has a Zacks Rank of #3 (Hold) right now. Investors should feel comfortable knowing that NX likely has seen a stronger improvement to its earnings outlook than ROAD has recently. 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.

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.

NX currently has a forward P/E ratio of 6.52, while ROAD has a forward P/E of 36.45. We also note that NX has a PEG ratio of 0.47. This popular figure is similar to the widely-used P/E ratio, but the PEG ratio also considers a company's expected EPS growth rate. ROAD currently has a PEG ratio of 0.92.

Another notable valuation metric for NX is its P/B ratio of 0.81. Investors use the P/B ratio to look at a stock's market value versus its book value, which is defined as total assets minus total liabilities. By comparison, ROAD has a P/B of 4.91.

Based on these metrics and many more, NX holds a Value grade of B, while ROAD has a Value grade of C.

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

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This article originally published on Zacks Investment Research (zacks.com).

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