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Should Value Investors Buy Israel Chemicals (ICL) Stock?

Zacks Equity Research

While the proven Zacks Rank places an emphasis on earnings estimates and estimate revisions to find strong stocks, we also know that investors tend to develop their own individual strategies. With this in mind, we are always looking at value, growth, and momentum trends to discover great companies.

Of these, perhaps no stock market trend is more popular than value investing, which is a strategy that has proven to be successful in all sorts of market environments. Value investors use tried-and-true metrics and fundamental analysis to find companies that they believe are undervalued at their current share price levels.

In addition to the Zacks Rank, investors looking for stocks with specific traits can utilize our Style Scores system. Of course, value investors will be most interested in the system's "Value" category. Stocks with "A" grades for Value and high Zacks Ranks are among the best value stocks available at any given moment.

Israel Chemicals (ICL) is a stock many investors are watching right now. ICL is currently holding a Zacks Rank of #2 (Buy) and a Value grade of A. The stock holds a P/E ratio of 11.43, while its industry has an average P/E of 18.29. Over the last 12 months, ICL's Forward P/E has been as high as 18.11 and as low as 11.38, with a median of 13.65.

We also note that ICL holds a PEG ratio of 1.20. 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. ICL's industry has an average PEG of 1.76 right now. ICL's PEG has been as high as 1.91 and as low as 1.20, with a median of 1.40, all within the past year.

Value investors also love the P/S ratio, which is calculated by simply dividing a stock's price with the company's sales. Some people prefer this metric because sales are harder to manipulate on an income statement. This means it could be a truer performance indicator. ICL has a P/S ratio of 1.2. This compares to its industry's average P/S of 1.57.

Value investors will likely look at more than just these metrics, but the above data helps show that Israel Chemicals is likely undervalued currently. And when considering the strength of its earnings outlook, ICL sticks out at as one of the market's strongest value stocks.


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