DOW vs. AIQUY: Which Stock Is the Better Value Option?
Investors looking for stocks in the Chemical - Diversified sector might want to consider either Dow Inc. (DOW) or Air Liquide (AIQUY). 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, Dow Inc. is sporting a Zacks Rank of #2 (Buy), while Air Liquide has a Zacks Rank of #3 (Hold). Investors should feel comfortable knowing that DOW likely has seen a stronger improvement to its earnings outlook than AIQUY has recently. But this is only part of the picture for value investors.
Value investors are also interested in a number of tried-and-true valuation metrics that help show when 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.
DOW currently has a forward P/E ratio of 7.22, while AIQUY has a forward P/E of 28.47. We also note that DOW has a PEG ratio of 0.26. 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. AIQUY currently has a PEG ratio of 4.48.
Another notable valuation metric for DOW is its P/B ratio of 2.78. The P/B ratio is used to compare a stock's market value with its book value, which is defined as total assets minus total liabilities. For comparison, AIQUY has a P/B of 3.56.
Based on these metrics and many more, DOW holds a Value grade of A, while AIQUY has a Value grade of D.
DOW has seen stronger estimate revision activity and sports more attractive valuation metrics than AIQUY, so it seems like value investors will conclude that DOW is the superior option right now.
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