Investors with an interest in Chemical - Specialty stocks have likely encountered both Axalta Coating Systems (AXTA) and Ecolab (ECL). But which of these two companies is the best option for those looking for undervalued stocks? Let's take a closer look.
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.
Axalta Coating Systems and Ecolab are sporting Zacks Ranks of #2 (Buy) and #3 (Hold), respectively, right now. 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 just one factor that value investors are interested in.
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.
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 15.40, while ECL has a forward P/E of 34.15. We also note that AXTA has a PEG ratio of 1.19. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. ECL currently has a PEG ratio of 2.74.
Another notable valuation metric for AXTA is its P/B ratio of 4.92. 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, ECL has a P/B of 7.02.
These are just a few of the metrics contributing to AXTA's Value grade of B and ECL's Value grade of D.
AXTA 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 AXTA is likely the superior value option right now.
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Axalta Coating Systems Ltd. (AXTA) : Free Stock Analysis Report
Ecolab Inc. (ECL) : Free Stock Analysis Report
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