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

Investors interested in stocks from the Paper and Related Products sector have probably already heard of Suzano S.A. Sponsored ADR (SUZ) and Klabin SA (KLBAY). But which of these two stocks presents investors with the better value opportunity right now? Let's 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 emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.

Suzano S.A. Sponsored ADR has a Zacks Rank of #1 (Strong Buy), while Klabin SA has a Zacks Rank of #3 (Hold) right now. This means that SUZ's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. But this is only part of the picture for value investors.

Value investors also try to analyze a wide range of traditional figures and metrics to help determine whether a company is undervalued at its current share price levels.

Our Value category highlights undervalued companies by looking at a variety of key metrics, including the popular P/E ratio, as well as the P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that have been used by value investors for years.

SUZ currently has a forward P/E ratio of 4.96, while KLBAY has a forward P/E of 11.27. We also note that SUZ has a PEG ratio of 0.10. This figure is similar to the commonly-used P/E ratio, with the PEG ratio also factoring in a company's expected earnings growth rate. KLBAY currently has a PEG ratio of 0.54.

Another notable valuation metric for SUZ is its P/B ratio of 1.75. 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, KLBAY has a P/B of 11.36.

These are just a few of the metrics contributing to SUZ's Value grade of A and KLBAY's Value grade of C.

SUZ sticks out from KLBAY in both our Zacks Rank and Style Scores models, so value investors will likely feel that SUZ is the better option right now.

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

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