Investors with an interest in Chemical - Specialty stocks have likely encountered both Element Solutions (ESI) and Hawkins (HWKN). But which of these two stocks presents investors with the better value opportunity right now? Let's take a closer look.
Everyone has their own methods for finding great value opportunities, but our model includes pairing an impressive grade in the Value category of our Style Scores system with a strong Zacks Rank. The Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.
Element Solutions has a Zacks Rank of #2 (Buy), while Hawkins has a Zacks Rank of #3 (Hold) right now. This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that ESI is likely seeing its earnings outlook improve to a greater extent. But this is only part of the picture 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.
Our Value category grades stocks based on a number of key metrics, including the tried-and-true P/E ratio, the P/S ratio, earnings yield, and cash flow per share, as well as a variety of other fundamentals that value investors frequently use.
ESI currently has a forward P/E ratio of 20.61, while HWKN has a forward P/E of 36.56. We also note that ESI has a PEG ratio of 1.65. 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 3.05.
Another notable valuation metric for ESI is its P/B ratio of 3.25. 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, HWKN has a P/B of 5.8.
Based on these metrics and many more, ESI holds a Value grade of B, while HWKN has a Value grade of C.
ESI has seen stronger estimate revision activity and sports more attractive valuation metrics than HWKN, so it seems like value investors will conclude that ESI is the superior 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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