Investors looking for stocks in the Chemical - Specialty sector might want to consider either H. B. Fuller (FUL) or Novozymes A/S (NVZMY). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.
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.
Right now, H. B. Fuller is sporting a Zacks Rank of #2 (Buy), while Novozymes A/S has a Zacks Rank of #3 (Hold). This means that FUL's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. 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.
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.
FUL currently has a forward P/E ratio of 12.06, while NVZMY has a forward P/E of 28.84. We also note that FUL has a PEG ratio of 0.64. 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. NVZMY currently has a PEG ratio of 3.28.
Another notable valuation metric for FUL is its P/B ratio of 1.52. 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, NVZMY has a P/B of 2.27.
These are just a few of the metrics contributing to FUL's Value grade of A and NVZMY's Value grade of F.
FUL sticks out from NVZMY in both our Zacks Rank and Style Scores models, so value investors will likely feel that FUL is the better option right now.
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H. B. Fuller Company (FUL): Free Stock Analysis Report
Novozymes A/S (NVZMY): Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).