Investors interested in stocks from the Chemical - Specialty sector have probably already heard of Element Solutions (ESI) and Hawkins (HWKN). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.
The best way to find great value stocks is to pair a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system. 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 and Hawkins are sporting Zacks Ranks of #2 (Buy) and #3 (Hold), respectively, right now. This means that ESI's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. However, value investors will care about much more than just this.
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.
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.
ESI currently has a forward P/E ratio of 17.56, while HWKN has a forward P/E of 38.08. We also note that ESI has a PEG ratio of 1.68. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. HWKN currently has a PEG ratio of 2.38.
Another notable valuation metric for ESI is its P/B ratio of 2.32. The P/B is a method of comparing a stock's market value to its book value, which is defined as total assets minus total liabilities. By comparison, HWKN has a P/B of 7.24.
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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