CMP or APD: Which Is the Better Value Stock Right Now?
Investors looking for stocks in the Chemical - Diversified sector might want to consider either Compass Minerals (CMP) or Air Products and Chemicals (APD). But which of these two companies is the best option for those looking for undervalued stocks? Let's take a closer look.
There are plenty of strategies for discovering value stocks, but we have found that pairing a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system produces the best returns. The proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.
Right now, Compass Minerals is sporting a Zacks Rank of #2 (Buy), while Air Products and Chemicals has a Zacks Rank of #3 (Hold). Investors should feel comfortable knowing that CMP likely has seen a stronger improvement to its earnings outlook than APD has recently. However, value investors will care about much more than just this.
Value investors also tend to look at a number of traditional, tried-and-true figures to help them find stocks that they believe are undervalued at their 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.
CMP currently has a forward P/E ratio of 17.60, while APD has a forward P/E of 22.08. We also note that CMP has a PEG ratio of 0.31. 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. APD currently has a PEG ratio of 2.16.
Another notable valuation metric for CMP is its P/B ratio of 2.11. 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, APD has a P/B of 4.10.
These metrics, and several others, help CMP earn a Value grade of A, while APD has been given a Value grade of C.
CMP 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 CMP is likely the superior value option right now.
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Compass Minerals International, Inc. (CMP) : Free Stock Analysis Report
Air Products and Chemicals, Inc. (APD) : Free Stock Analysis Report
