SUZ or KLBAY: Which Is the Better Value Stock Right Now?

Investors interested in Paper and Related Products stocks are likely familiar with Suzano S.A. Sponsored ADR (SUZ) and Klabin SA (KLBAY). But which of these two stocks offers value investors a better bang for their buck right now? We'll need to 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 proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.

Currently, Suzano S.A. Sponsored ADR has a Zacks Rank of #1 (Strong Buy), while Klabin SA has a Zacks Rank of #3 (Hold). Investors should feel comfortable knowing that SUZ likely has seen a stronger improvement to its earnings outlook than KLBAY has recently. But this is just one piece of the puzzle for value investors.

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.

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 7.97, while KLBAY has a forward P/E of 8.52. We also note that SUZ has a PEG ratio of 0.18. 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. KLBAY currently has a PEG ratio of 0.92.

Another notable valuation metric for SUZ is its P/B ratio of 1.5. 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, KLBAY has a P/B of 8.39.

These are just a few of the metrics contributing to SUZ's Value grade of B and KLBAY's Value grade of C.

SUZ has seen stronger estimate revision activity and sports more attractive valuation metrics than KLBAY, so it seems like value investors will conclude that SUZ is the superior option right now.

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

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