JMPLY vs. APD: Which Stock Should Value Investors Buy Now?

Investors interested in Chemical - Diversified stocks are likely familiar with Johnson Matthey PLC (JMPLY) and Air Products and Chemicals (APD). 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 proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.

Currently, Johnson Matthey PLC has a Zacks Rank of #2 (Buy), while Air Products and Chemicals has a Zacks Rank of #3 (Hold). Investors should feel comfortable knowing that JMPLY likely has seen a stronger improvement to its earnings outlook than APD has recently. However, value investors will care about much more than just this.

Value investors also tend to look at a number of traditional, tried-and-true figures to help them find stocks 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.

JMPLY currently has a forward P/E ratio of 12.60, while APD has a forward P/E of 23.98. We also note that JMPLY has a PEG ratio of 3.10. 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. APD currently has a PEG ratio of 6.43.

Another notable valuation metric for JMPLY is its P/B ratio of 1.43. The P/B ratio is used to compare a stock's market value with its book value, which is defined as total assets minus total liabilities. For comparison, APD has a P/B of 3.61.

Based on these metrics and many more, JMPLY holds a Value grade of A, while APD has a Value grade of D.

JMPLY stands above APD thanks to its solid earnings outlook, and based on these valuation figures, we also feel that JMPLY is the superior value option right now.

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

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