MEOH or PPG: Which Is the Better Value Stock Right Now?
Investors interested in stocks from the Chemical - Diversified sector have probably already heard of Methanex (MEOH) and PPG Industries (PPG). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.
We have found that the best way to discover great value opportunities is to pair a strong Zacks Rank with a great 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.
Methanex has a Zacks Rank of #1 (Strong Buy), while PPG Industries has a Zacks Rank of #4 (Sell) right now. This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that MEOH 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 are also interested in a number of tried-and-true valuation metrics that help show when a company is undervalued at its current share price levels.
Our Value category grades stocks based on a number of key metrics, including the tried-and-true P/E ratio, the P/S ratio, earnings yield, and cash flow per share, as well as a variety of other fundamentals that value investors frequently use.
MEOH currently has a forward P/E ratio of 7.94, while PPG has a forward P/E of 17.95. We also note that MEOH has a PEG ratio of 0.53. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. PPG currently has a PEG ratio of 2.16.
Another notable valuation metric for MEOH is its P/B ratio of 2.73. 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, PPG has a P/B of 4.93.
Based on these metrics and many more, MEOH holds a Value grade of A, while PPG has a Value grade of D.
MEOH sticks out from PPG in both our Zacks Rank and Style Scores models, so value investors will likely feel that MEOH is the better option right now.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Methanex Corporation (MEOH) : Free Stock Analysis Report
PPG Industries, Inc. (PPG) : Free Stock Analysis Report
To read this article on Zacks.com click here.
