SUZ vs. KLBAY: Which Stock Is the Better Value Option?

Investors interested in Paper and Related Products stocks are likely familiar with Suzano S.A. Sponsored ADR (SUZ) and Klabin SA (KLBAY). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.

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.

Currently, Suzano S.A. Sponsored ADR has a Zacks Rank of #1 (Strong Buy), while Klabin SA 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 SUZ 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.

SUZ currently has a forward P/E ratio of 5.14, while KLBAY has a forward P/E of 31.06. We also note that SUZ has a PEG ratio of 0.12. 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. KLBAY currently has a PEG ratio of 2.00.

Another notable valuation metric for SUZ is its P/B ratio of 1.09. 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, KLBAY has a P/B of 7.21.

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

SUZ 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 SUZ is likely the superior value option right now.

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

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