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Investors looking for stocks in the Chemical - Diversified sector might want to consider either Akzo Nobel NV (AKZOY) or Air Liquide (AIQUY). 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 Zacks Rank is a proven strategy that targets companies with positive earnings estimate revision trends, while our Style Scores work to grade companies based on specific traits.
Akzo Nobel NV has a Zacks Rank of #2 (Buy), while Air Liquide 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 AKZOY 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.
AKZOY currently has a forward P/E ratio of 12.69, while AIQUY has a forward P/E of 27.63. We also note that AKZOY has a PEG ratio of 0.64. 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. AIQUY currently has a PEG ratio of 1.90.
Another notable valuation metric for AKZOY is its P/B ratio of 1.94. 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, AIQUY has a P/B of 3.87.
These metrics, and several others, help AKZOY earn a Value grade of A, while AIQUY has been given a Value grade of D.
AKZOY 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 AKZOY is likely the superior value option right now.
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Akzo Nobel NV (AKZOY) : Free Stock Analysis Report
Air Liquide (AIQUY) : Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).