DOW vs. AIQUY: Which Stock Is the Better Value Option?
Investors interested in stocks from the Chemical - Diversified sector have probably already heard of Dow Inc. (DOW) and Air Liquide (AIQUY). 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 puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
Currently, Dow Inc. has a Zacks Rank of #2 (Buy), while Air Liquide 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 DOW is likely seeing its earnings outlook improve to a greater extent. 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.
Our Value category grades stocks based on a number of key metrics, including the tried-and-true P/E ratio, the P/S ratio, earnings yield, and cash flow per share, as well as a variety of other fundamentals that value investors frequently use.
DOW currently has a forward P/E ratio of 7.57, while AIQUY has a forward P/E of 28.26. We also note that DOW has a PEG ratio of 0.28. This popular figure is similar to the widely-used P/E ratio, but the PEG ratio also considers a company's expected EPS growth rate. AIQUY currently has a PEG ratio of 4.44.
Another notable valuation metric for DOW is its P/B ratio of 2.92. 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 3.85.
These are just a few of the metrics contributing to DOW's Value grade of A and AIQUY's 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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