Investors interested in Chemical - Specialty stocks are likely familiar with H. B. Fuller (FUL) and 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 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.
H. B. Fuller has a Zacks Rank of #2 (Buy), while Hawkins has a Zacks Rank of #3 (Hold) right now. The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that FUL has an improving earnings outlook. However, value investors will care about much more than just this.
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.
The Style Score Value grade factors in a variety of key fundamental metrics, including the popular P/E ratio, P/S ratio, earnings yield, cash flow per share, and a number of other key stats that are commonly used by value investors.
FUL currently has a forward P/E ratio of 11.94, while HWKN has a forward P/E of 35.84. We also note that FUL has a PEG ratio of 0.75. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. HWKN currently has a PEG ratio of 2.76.
Another notable valuation metric for FUL is its P/B ratio of 1.5. Investors use the P/B ratio to look at a stock's market value versus its book value, which is defined as total assets minus total liabilities. By comparison, HWKN has a P/B of 5.99.
Based on these metrics and many more, FUL holds a Value grade of A, while HWKN has a Value grade of D.
FUL is currently sporting an improving earnings outlook, which makes it stick out in our Zacks Rank model. And, based on the above valuation metrics, we feel that FUL is likely the superior value option right now.
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H. B. Fuller Company (FUL): Free Stock Analysis Report
Hawkins, Inc. (HWKN): Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).