Investors interested in stocks from the Chemical - Specialty sector have probably already heard of Daqo New Energy (DQ) and H. B. Fuller (FUL). 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.
Currently, Daqo New Energy has a Zacks Rank of #2 (Buy), while H. B. Fuller has a Zacks Rank of #4 (Sell). This means that DQ's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. But this is just one factor that value investors are interested in.
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.
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.
DQ currently has a forward P/E ratio of 5.69, while FUL has a forward P/E of 12.55. We also note that DQ has a PEG ratio of 0.20. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. FUL currently has a PEG ratio of 1.72.
Another notable valuation metric for DQ is its P/B ratio of 0.95. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. For comparison, FUL has a P/B of 1.37.
Based on these metrics and many more, DQ holds a Value grade of A, while FUL has a Value grade of C.
DQ has seen stronger estimate revision activity and sports more attractive valuation metrics than FUL, so it seems like value investors will conclude that DQ is the superior option right now.
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DAQO New Energy Corp. (DQ) : Free Stock Analysis Report
H. B. Fuller Company (FUL) : Free Stock Analysis Report
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