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

Investors interested in stocks from the Mining - Miscellaneous sector have probably already heard of Norsk Hydro ASA (NHYDY) and BHP (BHP). But which of these two stocks offers value investors a better bang for their buck right now? We'll need to take a closer look.

We have found that the best way to discover great value opportunities is to pair a strong Zacks Rank with a great 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.

Currently, Norsk Hydro ASA has a Zacks Rank of #1 (Strong Buy), while BHP has a Zacks Rank of #3 (Hold). This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that NHYDY is likely seeing its earnings outlook improve to a greater extent. But this is just one piece of the puzzle for value investors.

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 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.

NHYDY currently has a forward P/E ratio of 9.42, while BHP has a forward P/E of 16.21. We also note that NHYDY has a PEG ratio of 0.74. 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. BHP currently has a PEG ratio of 1.09.

Another notable valuation metric for NHYDY is its P/B ratio of 2.15. 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 3.62.

These metrics, and several others, help NHYDY earn a Value grade of A, while BHP has been given a Value grade of C.

NHYDY has seen stronger estimate revision activity and sports more attractive valuation metrics than BHP, so it seems like value investors will conclude that NHYDY is the superior option right now.

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

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