AVNT vs. AIQUY: Which Stock Is the Better Value Option?

Investors looking for stocks in the Chemical - Diversified sector might want to consider either Avient (AVNT) or Air Liquide (AIQUY). But which of these two stocks presents investors with the better value opportunity right now? 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 puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.

Avient has a Zacks Rank of #2 (Buy), while Air Liquide has a Zacks Rank of #4 (Sell) right now. The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that AVNT has an improving earnings outlook. But this is only part of the picture for value investors.

Value investors also try to analyze a wide range of traditional figures and metrics to help determine whether a company is undervalued at its 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.

AVNT currently has a forward P/E ratio of 11.73, while AIQUY has a forward P/E of 28.24. We also note that AVNT has a PEG ratio of 1.13. 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. AIQUY currently has a PEG ratio of 2.78.

Another notable valuation metric for AVNT is its P/B ratio of 1.37. The P/B ratio is used to compare a stock's market value with its book value, which is defined as total assets minus total liabilities. For comparison, AIQUY has a P/B of 4.22.

These are just a few of the metrics contributing to AVNT's Value grade of A and AIQUY's Value grade of F.

AVNT stands above AIQUY thanks to its solid earnings outlook, and based on these valuation figures, we also feel that AVNT is the superior value option right now.

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

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