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Investors with an interest in Chemical - Specialty stocks have likely encountered both Axalta Coating Systems (AXTA) and Hawkins (HWKN). But which of these two stocks presents investors with the better value opportunity right now? Let's take a closer look.
We have found that the best way to discover great value opportunities is to pair a strong Zacks Rank with a great 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.
Right now, Axalta Coating Systems is sporting a Zacks Rank of #1 (Strong Buy), while Hawkins has a Zacks Rank of #3 (Hold). This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that AXTA 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 try to analyze a wide range of traditional figures and metrics to help determine whether a company is undervalued at its current share price levels.
Our Value category highlights undervalued companies by looking at a variety of key metrics, including the popular P/E ratio, as well as the P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that have been used by value investors for years.
AXTA currently has a forward P/E ratio of 13.70, while HWKN has a forward P/E of 26.53. We also note that AXTA has a PEG ratio of 0.89. 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 3.79.
Another notable valuation metric for AXTA is its P/B ratio of 3.83. 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 4.85.
Based on these metrics and many more, AXTA holds a Value grade of B, while HWKN has a Value grade of D.
AXTA sticks out from HWKN in both our Zacks Rank and Style Scores models, so value investors will likely feel that AXTA is the better option right now.
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Axalta Coating Systems Ltd. (AXTA) : Free Stock Analysis Report
Hawkins, Inc. (HWKN) : Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).