Investors looking for stocks in the Chemical - Specialty sector might want to consider either FUCHS SE - Unsponsored ADR (FUPBY) or Hawkins (HWKN). 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.
FUCHS SE - Unsponsored ADR has a Zacks Rank of #2 (Buy), while Hawkins has a Zacks Rank of #3 (Hold) right now. This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that FUPBY is likely seeing its earnings outlook improve to a greater extent. But this is just one factor that value investors are interested in.
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.
FUPBY currently has a forward P/E ratio of 15.49, while HWKN has a forward P/E of 36.62. We also note that FUPBY has a PEG ratio of 2.78. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. HWKN currently has a PEG ratio of 2.82.
Another notable valuation metric for FUPBY is its P/B ratio of 2.61. The P/B is a method of comparing a stock's market value to its book value, which is defined as total assets minus total liabilities. By comparison, HWKN has a P/B of 6.12.
These are just a few of the metrics contributing to FUPBY's Value grade of B and HWKN's Value grade of D.
FUPBY has seen stronger estimate revision activity and sports more attractive valuation metrics than HWKN, so it seems like value investors will conclude that FUPBY is the superior option right now.
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FUCHS SE - Unsponsored ADR (FUPBY): Free Stock Analysis Report
Hawkins, Inc. (HWKN): Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).