Investors interested in Chemical - Diversified stocks are likely familiar with LyondellBasell (LYB) and Air Liquide (AIQUY). 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 favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.
LyondellBasell and Air Liquide are sporting Zacks Ranks of #1 (Strong Buy) and #2 (Buy), respectively, right now. The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that LYB has an improving earnings outlook. However, value investors will care about much more than just this.
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.
LYB currently has a forward P/E ratio of 7.99, while AIQUY has a forward P/E of 26.26. We also note that LYB has a PEG ratio of 0.16. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. AIQUY currently has a PEG ratio of 2.94.
Another notable valuation metric for LYB is its P/B ratio of 2.24. 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, AIQUY has a P/B of 3.98.
Based on these metrics and many more, LYB holds a Value grade of B, while AIQUY has a Value grade of D.
LYB 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 LYB is likely the superior value option right now.
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LyondellBasell Industries N.V. (LYB): Free Stock Analysis Report
Air Liquide (AIQUY): Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).