Investors interested in Chemical - Diversified stocks are likely familiar with Akzo Nobel NV (AKZOY) 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.
Everyone has their own methods for finding great value opportunities, but our model includes pairing an impressive grade in the Value category of our Style Scores system with a strong Zacks Rank. The proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
Akzo Nobel NV has a Zacks Rank of #2 (Buy), while Air Products and Chemicals has a Zacks Rank of #3 (Hold) right now. Investors should feel comfortable knowing that AKZOY likely has seen a stronger improvement to its earnings outlook than APD has recently. But this is just one factor that value investors are interested in.
Value investors also tend to look at a number of traditional, tried-and-true figures to help them find stocks that they believe are undervalued at their current share price levels.
Our Value category highlights undervalued companies by looking at a variety of key metrics, including the popular P/E ratio, as well as the P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that have been used by value investors for years.
AKZOY currently has a forward P/E ratio of 15.56, while APD has a forward P/E of 21.94. We also note that AKZOY has a PEG ratio of 1.84. This figure is similar to the commonly-used P/E ratio, with the PEG ratio also factoring in a company's expected earnings growth rate. APD currently has a PEG ratio of 2.98.
Another notable valuation metric for AKZOY is its P/B ratio of 2. 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, APD has a P/B of 3.96.
These are just a few of the metrics contributing to AKZOY's Value grade of B and APD's Value grade of D.
AKZOY stands above APD thanks to its solid earnings outlook, and based on these valuation figures, we also feel that AKZOY is the superior value option right now.
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Akzo Nobel NV (AKZOY): Free Stock Analysis Report
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This article originally published on Zacks Investment Research (zacks.com).