Investors looking for stocks in the Chemical - Plastic sector might want to consider either Westlake Chemical (WLK) or 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 proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.
Currently, Westlake Chemical has a Zacks Rank of #2 (Buy), while PolyOne has a Zacks Rank of #3 (Hold). Investors should feel comfortable knowing that WLK likely has seen a stronger improvement to its earnings outlook than POL has recently. But this is only part of the picture for value investors.
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.
Our Value category highlights undervalued companies by looking at a variety of key metrics, including the popular P/E ratio, as well as the P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that have been used by value investors for years.
WLK currently has a forward P/E ratio of 11.87, while POL has a forward P/E of 17.35. We also note that WLK has a PEG ratio of 0.97. This popular figure is similar to the widely-used P/E ratio, but the PEG ratio also considers a company's expected EPS growth rate. POL currently has a PEG ratio of 1.67.
Another notable valuation metric for WLK is its P/B ratio of 2.48. 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, POL has a P/B of 6.09.
These metrics, and several others, help WLK earn a Value grade of B, while POL has been given a Value grade of C.
WLK is currently sporting an improving earnings outlook, which makes it stick out in our Zacks Rank model. And, based on the above valuation metrics, we feel that WLK is likely the superior value option right now.
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