Investors interested in stocks from the Chemical - Specialty sector have probably already heard of Element Solutions (ESI) and SIKA AG - Unsponsored ADR (SXYAY). But which of these two stocks presents investors with the better value opportunity right now? 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.
Currently, Element Solutions has a Zacks Rank of #2 (Buy), while SIKA AG - Unsponsored ADR has a Zacks Rank of #4 (Sell). The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that ESI has an improving earnings outlook. However, value investors will care about much more than just this.
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.
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.
ESI currently has a forward P/E ratio of 17.45, while SXYAY has a forward P/E of 22.45. We also note that ESI has a PEG ratio of 1.27. 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. SXYAY currently has a PEG ratio of 12.13.
Another notable valuation metric for ESI is its P/B ratio of 2.31. 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, SXYAY has a P/B of 4.42.
These are just a few of the metrics contributing to ESI's Value grade of B and SXYAY's Value grade of C.
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 SIKA AG - Unsponsored ADR (SXYAY): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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