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 companies is the best option for those looking for undervalued stocks? Let's take a closer look.
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.
Suzano S.A. Sponsored ADR and Klabin SA are sporting Zacks Ranks of #1 (Strong Buy) and #4 (Sell), respectively, right now. This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that SUZ is likely seeing its earnings outlook improve to a greater extent. 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.
The Value category of the Style Scores system identifies undervalued companies by looking at a number of key metrics. These include the long-favored P/E ratio, P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that help us determine a company's fair value.
SUZ currently has a forward P/E ratio of 4.09, while KLBAY has a forward P/E of 11.30. We also note that SUZ has a PEG ratio of 0.08. 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 0.68.
Another notable valuation metric for SUZ is its P/B ratio of 1.57. 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 9.01.
Based on these metrics and many more, SUZ holds a Value grade of A, while KLBAY has a Value grade of C.
SUZ 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 SUZ is likely the superior value option right now.
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Suzano S.A. Sponsored ADR (SUZ): Free Stock Analysis Report Klabin SA (KLBAY): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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