Should value investors buy H&E Equipment Services (HEES) shares?

Here at Zacks, we focus on the proven Zacks Rank system, which emphasizes earnings estimates and estimate revisions, to find great stocks, but we always pay attention to the latest value, growth and momentum trends to highlight strong picks.

Of these, perhaps no stock market trend is more popular than value investing, a strategy that has proven successful in all kinds of market environments. Value investors use fundamental analysis and traditional valuation metrics to find stocks that they believe are undervalued by the market at large.

In addition to the Zacks Rank, investors can also use our innovative Style Scores system to find stocks with specific traits. For example, value investors should focus on the Value category. Stocks with high Zacks Ranks and “A” grades for Value are among the highest-quality value stocks on the market today.

H&E Equipment Services (HEES) is a stock that is currently being watched by many investors. HEES currently has a Zacks Rank of #2 (Buy) as well as a Value grade of A. The stock is trading at a P/E ratio of 12.52, compared to the industry average of 16.01. HEES’s Forward P/E ratio has been as high as 18.06 and 8.27 over the past year, with a median of 11.28.

We also note that HEES has a PEG ratio of 0.40. This popular number is similar to the widely used P/E ratio, but the PEG ratio also takes into account a company’s expected EPS growth rate. HEES currently has an industry average PEG of 1.16. Over the past year, HEES’s PEG has ranged between 0.66 and 0.23, with a median of 0.37.

Investors should also be aware that HEES has a P/B ratio of 4.89. The P/B ratio compares a stock’s market value to its book value, which is defined as total assets minus total liabilities. This company’s current P/B ratio looks solid compared to the industry average of 6.74. Over the past 52 weeks, HEES’s P/B ratio has ranged from 5.38 to 2.88, with the median being 4.15.

Finally, we should also consider that HEES has a P/CF ratio of 4.24. This data point takes into account a company’s operating cash flow and is often used to find companies that are undervalued considering their solid cash outlook. HEES’s current P/CF looks attractive when compared to its industry’s average P/CF of 11.14. Over the past 52 weeks, HEES’s P/CF has ranged between 4.49 and 2.44, with a median of 3.46.

If you are looking for another solid value stock in the Manufacturing – Construction and Mining sector, take a look at Komatsu (KMTUY)KMTUY is a #2 Buy stock with a Value Score of A.

Komatsu shares currently trade at a forward earnings multiple of 10.62 and a PEG ratio of 1.65. The industry’s P/E and PEG ratios are 16.01 and 1.16, respectively.

Over the past year, KMTUY’s P/E ratio has been as high as 11.84 or as low as 8.29, with a median of 10.03; its PEG ratio has been as high as 1.69 or as low as 0.27, with a median of 0.37, over the same period.

Komatsu also has a P/B ratio of 1.15, while the industry’s price-to-book ratio is 6.74. Over the past year, the P/B ratio was 1.32, 0.87, and an average of 1.08.

Value investors will likely look at more than just these metrics, but the data above shows that H&E Equipment Services and Komatsu are likely undervalued right now. And when you consider the strength of their earnings outlooks, HEES and KMTUY stand out as some of the strongest value stocks on the market.

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H&E Equipment Services, Inc. (HEES): Free Stock Analysis Report

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