Investors with an interest in Chemical - Diversified stocks have likely encountered both Univar (UNVR) and PPG Industries (PPG). But which of these two stocks presents investors with the better value opportunity right now? Let's take a closer look.
There are plenty of strategies for discovering value stocks, but we have found that pairing a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system produces the best returns. The proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.
Right now, Univar is sporting a Zacks Rank of #2 (Buy), while PPG Industries 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 UNVR is likely seeing its earnings outlook improve to a greater extent. However, value investors will care about much more than just this.
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.
The Style Score Value grade factors in a variety of key fundamental metrics, including the popular P/E ratio, P/S ratio, earnings yield, cash flow per share, and a number of other key stats that are commonly used by value investors.
UNVR currently has a forward P/E ratio of 6.64, while PPG has a forward P/E of 16.68. We also note that UNVR has a PEG ratio of 0.46. 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 2.31.
Another notable valuation metric for UNVR is its P/B ratio of 1.46. 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, PPG has a P/B of 4.20.
These are just a few of the metrics contributing to UNVR's Value grade of A and PPG's Value grade of C.
UNVR has seen stronger estimate revision activity and sports more attractive valuation metrics than PPG, so it seems like value investors will conclude that UNVR is the superior option right now.
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Univar Solutions Inc. (UNVR) : Free Stock Analysis Report
PPG Industries, Inc. (PPG) : Free Stock Analysis Report
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