AVNT vs. APD: Which Stock Should Value Investors Buy Now?

Investors with an interest in Chemical - Diversified stocks have likely encountered both Avient (AVNT) and Air Products and Chemicals (APD). But which of these two companies is the best option for those looking for undervalued stocks? Let's take a closer look.

We have found that the best way to discover great value opportunities is to pair a strong Zacks Rank with a great grade in the Value category of our Style Scores system. The proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.

Right now, Avient is sporting a Zacks Rank of #2 (Buy), while Air Products and Chemicals has a Zacks Rank of #4 (Sell). This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that AVNT is likely seeing its earnings outlook improve to a greater extent. But this is just one piece of the puzzle 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.

Our Value category grades stocks based on a number of key metrics, including the tried-and-true P/E ratio, the P/S ratio, earnings yield, and cash flow per share, as well as a variety of other fundamentals that value investors frequently use.

AVNT currently has a forward P/E ratio of 12.40, while APD has a forward P/E of 20.37. We also note that AVNT has a PEG ratio of 1.25. 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. APD currently has a PEG ratio of 2.60.

Another notable valuation metric for AVNT is its P/B ratio of 1.44. 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, APD has a P/B of 3.39.

Based on these metrics and many more, AVNT holds a Value grade of A, while APD has a Value grade of C.

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

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

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