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HUN vs. RDSMY: Which Stock Is the Better Value Option?

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Investors interested in Chemical - Diversified stocks are likely familiar with Huntsman (HUN) and Koninklijke DSM NV (RDSMY). 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 Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.

Currently, Huntsman has a Zacks Rank of #1 (Strong Buy), while Koninklijke DSM NV 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 HUN 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.

HUN currently has a forward P/E ratio of 13.05, while RDSMY has a forward P/E of 29.83. We also note that HUN has a PEG ratio of 1.47. 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. RDSMY currently has a PEG ratio of 2.24.

Another notable valuation metric for HUN is its P/B ratio of 1.73. The P/B is a method of comparing a stock's market value to its book value, which is defined as total assets minus total liabilities. By comparison, RDSMY has a P/B of 3.71.

These are just a few of the metrics contributing to HUN's Value grade of B and RDSMY's Value grade of D.

HUN 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 HUN is likely the superior value option right now.


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