Investors interested in stocks from the Chemical - Specialty sector have probably already heard of H. B. Fuller (FUL) and Hawkins (HWKN). 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.
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 emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.
H. B. Fuller and Hawkins are both sporting a Zacks Rank of # 2 (Buy) right now. This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that these stocks have improving earnings outlooks. However, value investors will care about much more than just this.
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 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.
FUL currently has a forward P/E ratio of 13.57, while HWKN has a forward P/E of 29.06. We also note that FUL has a PEG ratio of 0.86. 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. HWKN currently has a PEG ratio of 2.12.
Another notable valuation metric for FUL is its P/B ratio of 1.67. 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 5.78.
These metrics, and several others, help FUL earn a Value grade of B, while HWKN has been given a Value grade of C.
Both FUL and HWKN are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that FUL is the superior value option right now.
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H. B. Fuller Company (FUL): Free Stock Analysis Report Hawkins, Inc. (HWKN): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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