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LYB vs. FMC: Which Stock Is the Better Value Option?

·2 min read

Investors interested in Chemical - Diversified stocks are likely familiar with LyondellBasell (LYB) and FMC (FMC). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.

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 is a proven strategy that targets companies with positive earnings estimate revision trends, while our Style Scores work to grade companies based on specific traits.

Right now, LyondellBasell is sporting a Zacks Rank of #2 (Buy), while FMC has a Zacks Rank of #3 (Hold). The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that LYB has an improving earnings outlook. 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.

LYB currently has a forward P/E ratio of 6.60, while FMC has a forward P/E of 17.40. We also note that LYB has a PEG ratio of 0.82. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. FMC currently has a PEG ratio of 1.58.

Another notable valuation metric for LYB is its P/B ratio of 2.97. 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, FMC has a P/B of 5.55.

These metrics, and several others, help LYB earn a Value grade of A, while FMC has been given a Value grade of C.

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


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LyondellBasell Industries N.V. (LYB) : Free Stock Analysis Report
 
FMC Corporation (FMC) : Free Stock Analysis Report
 
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