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ICL vs. ECL: Which Stock Is the Better Value Option?

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Zacks Equity Research
·2 min read
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Investors interested in Chemical - Specialty stocks are likely familiar with Israel Chemicals (ICL) and Ecolab (ECL). 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, Israel Chemicals has a Zacks Rank of #2 (Buy), while Ecolab 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 ICL 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.

ICL currently has a forward P/E ratio of 18.72, while ECL has a forward P/E of 42.92. We also note that ICL has a PEG ratio of 0.96. 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. ECL currently has a PEG ratio of 3.95.

Another notable valuation metric for ICL is its P/B ratio of 1.96. 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, ECL has a P/B of 10.13.

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

ICL 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 ICL is likely the superior value option right now.


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