Investors interested in Chemical - Specialty stocks are likely familiar with Element Solutions (ESI) and Hawkins (HWKN). 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.
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 proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
Element Solutions has a Zacks Rank of #2 (Buy), while Hawkins has a Zacks Rank of #3 (Hold) right now. Investors should feel comfortable knowing that ESI likely has seen a stronger improvement to its earnings outlook than HWKN has recently. But this is just one factor that value investors are interested in.
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 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.
ESI currently has a forward P/E ratio of 16.98, while HWKN has a forward P/E of 36.02. We also note that ESI has a PEG ratio of 1.75. 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. HWKN currently has a PEG ratio of 2.63.
Another notable valuation metric for ESI is its P/B ratio of 2.32. 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, HWKN has a P/B of 7.16.
Based on these metrics and many more, ESI holds a Value grade of B, while HWKN has a Value grade of D.
ESI 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 ESI is likely the superior value option right now.
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Element Solutions Inc. (ESI): Free Stock Analysis Report Hawkins, Inc. (HWKN): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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