NHYDY or BHP: Which Is the Better Value Stock Right Now?

Investors with an interest in Mining - Miscellaneous stocks have likely encountered both Norsk Hydro ASA (NHYDY) and BHP (BHP). But which of these two companies is the best option for those looking for undervalued stocks? Let's take a closer look.

There are plenty of strategies for discovering value stocks, but we have found that pairing a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system produces the best returns. The Zacks Rank is a proven strategy that targets companies with positive earnings estimate revision trends, while our Style Scores work to grade companies based on specific traits.

Norsk Hydro ASA and BHP are sporting Zacks Ranks of #2 (Buy) and #3 (Hold), respectively, right now. The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that NHYDY has an improving earnings outlook. But this is just one piece of the puzzle for value investors.

Value investors are also interested in a number of tried-and-true valuation metrics that help show when a company is undervalued at its 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.

NHYDY currently has a forward P/E ratio of 11.13, while BHP has a forward P/E of 18.17. We also note that NHYDY has a PEG ratio of 1.82. 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. BHP currently has a PEG ratio of 11.96.

Another notable valuation metric for NHYDY is its P/B ratio of 1.7. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. For comparison, BHP has a P/B of 4.15.

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

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

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

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