Investors with an interest in Chemical - Specialty stocks have likely encountered both Daqo New Energy (DQ) and H. B. Fuller (FUL). But which of these two stocks presents investors with the better value opportunity right now? 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, Daqo New Energy is sporting a Zacks Rank of #1 (Strong Buy), while H. B. Fuller has a Zacks Rank of #5 (Strong Sell). This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that DQ 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 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 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.
DQ currently has a forward P/E ratio of 8.88, while FUL has a forward P/E of 14.76. We also note that DQ has a PEG ratio of 0.31. 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 1.57.
Another notable valuation metric for DQ is its P/B ratio of 1.57. 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, FUL has a P/B of 2.01.
Based on these metrics and many more, DQ holds a Value grade of A, while FUL has a Value grade of C.
DQ stands above FUL thanks to its solid earnings outlook, and based on these valuation figures, we also feel that DQ is the superior value option right now.
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