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Investors looking for stocks in the Diversified Operations sector might want to consider either LSB (LXU) or ITT (ITT). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.
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 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.
LSB and ITT are sporting Zacks Ranks of #2 (Buy) and #3 (Hold), respectively, right now. The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that LXU has an improving earnings outlook. But this is just one factor that value investors are interested in.
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.
The Value category of the Style Scores system identifies undervalued companies by looking at a number of key metrics. These include the long-favored P/E ratio, P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that help us determine a company's fair value.
LXU currently has a forward P/E ratio of 17.13, while ITT has a forward P/E of 23.44. We also note that LXU has a PEG ratio of 0.80. 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. ITT currently has a PEG ratio of 1.82.
Another notable valuation metric for LXU is its P/B ratio of 1.22. 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, ITT has a P/B of 4.49.
Based on these metrics and many more, LXU holds a Value grade of A, while ITT has a Value grade of D.
LXU 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 LXU is likely the superior value option right now.
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Lsb Industries Inc. (LXU) : Free Stock Analysis Report
ITT Inc. (ITT) : Free Stock Analysis Report