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FUL vs. COIHY: Which Stock Should Value Investors Buy Now?

Zacks Equity Research

Investors interested in stocks from the Chemical - Specialty sector have probably already heard of H. B. Fuller (FUL) and Croda International PLC Unsponsored ADR (COIHY). 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, H. B. Fuller has a Zacks Rank of #2 (Buy), while Croda International PLC Unsponsored ADR has a Zacks Rank of #4 (Sell). This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that FUL is likely seeing its earnings outlook improve to a greater extent. But this is only part of the picture for value investors.

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.

FUL currently has a forward P/E ratio of 13.99, while COIHY has a forward P/E of 26.61. We also note that FUL has a PEG ratio of 1.36. 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. COIHY currently has a PEG ratio of 2.22.

Another notable valuation metric for FUL is its P/B ratio of 2.13. 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, COIHY has a P/B of 7.72.

These are just a few of the metrics contributing to FUL's Value grade of B and COIHY's Value grade of F.

FUL 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 FUL is likely the superior value option right now.


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H. B. Fuller Company (FUL) : Free Stock Analysis Report
 
Croda International PLC Unsponsored ADR (COIHY) : Free Stock Analysis Report
 
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