HCMLY or KNF: Which Is the Better Value Stock Right Now?

Investors interested in Building Products - Miscellaneous stocks are likely familiar with Holcim Ltd Unsponsored ADR (HCMLY) and Knife River (KNF). 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 Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.

Right now, Holcim Ltd Unsponsored ADR is sporting a Zacks Rank of #2 (Buy), while Knife River has a Zacks Rank of #4 (Sell). Investors should feel comfortable knowing that HCMLY likely has seen a stronger improvement to its earnings outlook than KNF has recently. But this is only part of the picture 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.

HCMLY currently has a forward P/E ratio of 15.22, while KNF has a forward P/E of 23.57. We also note that HCMLY has a PEG ratio of 2.20. 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. KNF currently has a PEG ratio of 2.26.

Another notable valuation metric for HCMLY is its P/B ratio of 1.97. 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, KNF has a P/B of 3.65.

Based on these metrics and many more, HCMLY holds a Value grade of B, while KNF has a Value grade of C.

HCMLY stands above KNF thanks to its solid earnings outlook, and based on these valuation figures, we also feel that HCMLY 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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