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

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Investors looking for stocks in the Chemical - Specialty sector might want to consider either H. B. Fuller (FUL) or Livent (LTHM). But which of these two companies is the best option for those looking for undervalued stocks? Let's take a closer look.

The best way to find great value stocks is to pair a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system. The proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.

H. B. Fuller has a Zacks Rank of #2 (Buy), while Livent has a Zacks Rank of #3 (Hold) right now. 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 just one piece of the puzzle for value investors.

Value investors analyze a variety of traditional, tried-and-true metrics to help find companies 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 19.16, while LTHM has a forward P/E of 149.25. We also note that FUL has a PEG ratio of 2.25. This figure is similar to the commonly-used P/E ratio, with the PEG ratio also factoring in a company's expected earnings growth rate. LTHM currently has a PEG ratio of 3.06.

Another notable valuation metric for FUL is its P/B ratio of 2.46. 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, LTHM has a P/B of 4.90.

Based on these metrics and many more, FUL holds a Value grade of B, while LTHM has a Value grade of D.

FUL has seen stronger estimate revision activity and sports more attractive valuation metrics than LTHM, so it seems like value investors will conclude that FUL is the superior option right now.


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H. B. Fuller Company (FUL) : Free Stock Analysis Report
 
Livent Corporation (LTHM) : Free Stock Analysis Report
 
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Zacks Investment Research