Investors looking for stocks in the Chemical - Specialty sector might want to consider either PQ Group (PQG) or Ecolab (ECL). But which of these two stocks presents investors with the better value opportunity right now? Let's take a closer look.
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 Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.
PQ Group and Ecolab are sporting Zacks Ranks of #1 (Strong Buy) and #3 (Hold), respectively, right now. Investors should feel comfortable knowing that PQG likely has seen a stronger improvement to its earnings outlook than ECL has recently. However, value investors will care about much more than just this.
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.
PQG currently has a forward P/E ratio of 16.73, while ECL has a forward P/E of 32.12. We also note that PQG has a PEG ratio of 1.05. 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. ECL currently has a PEG ratio of 2.58.
Another notable valuation metric for PQG is its P/B ratio of 1.18. The P/B ratio is used to compare a stock's market value with its book value, which is defined as total assets minus total liabilities. For comparison, ECL has a P/B of 6.60.
Based on these metrics and many more, PQG holds a Value grade of B, while ECL has a Value grade of D.
PQG sticks out from ECL in both our Zacks Rank and Style Scores models, so value investors will likely feel that PQG is the better option right now.
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PQ Group Holdings Inc. (PQG) : Free Stock Analysis Report
Ecolab Inc. (ECL) : Free Stock Analysis Report
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