Investors interested in stocks from the Chemical - Plastic sector have probably already heard of NEXEO SOLUTIONS (NXEO) and PolyOne (POL). But which of these two stocks offers value investors a better bang for their buck right now? We'll need to 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.
Right now, NEXEO SOLUTIONS is sporting a Zacks Rank of #2 (Buy), while PolyOne has a Zacks Rank of #5 (Strong Sell). The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that NXEO has an improving earnings outlook. But this is just one factor that value investors are interested in.
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.
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.
NXEO currently has a forward P/E ratio of 10.55, while POL has a forward P/E of 12.90. We also note that NXEO has a PEG ratio of 0.53. 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. POL currently has a PEG ratio of 1.29.
Another notable valuation metric for NXEO is its P/B ratio of 1.10. 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, POL has a P/B of 4.01.
These are just a few of the metrics contributing to NXEO's Value grade of B and POL's Value grade of C.
NXEO sticks out from POL in both our Zacks Rank and Style Scores models, so value investors will likely feel that NXEO is the better option right now.
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