Investors interested in Chemical - Specialty stocks are likely familiar with H. B. Fuller (FUL) and Hawkins (HWKN). 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.
H. B. Fuller 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 FUL is likely seeing its earnings outlook improve to a greater extent. But this is just one piece of the puzzle for value investors.
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 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 13.77, while HWKN has a forward P/E of 32.06. We also note that FUL has a PEG ratio of 0.87. 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. HWKN currently has a PEG ratio of 2.34.
Another notable valuation metric for FUL is its P/B ratio of 1.73. The P/B is a method of comparing a stock's market value to its book value, which is defined as total assets minus total liabilities. By comparison, HWKN has a P/B of 6.37.
These metrics, and several others, help FUL earn a Value grade of B, while HWKN has been given a Value grade of D.
FUL 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 FUL is likely 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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