Investors interested in stocks from the Chemical - Plastic sector have probably already heard of Westlake Chemical (WLK) 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.
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 is a proven strategy that targets companies with positive earnings estimate revision trends, while our Style Scores work to grade companies based on specific traits.
Currently, Westlake Chemical has a Zacks Rank of #1 (Strong Buy), while PolyOne has a Zacks Rank of #3 (Hold). The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that WLK 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 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 13.46, while POL has a forward P/E of 17.03. We also note that WLK has a PEG ratio of 1.10. 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 1.64.
Another notable valuation metric for WLK is its P/B ratio of 2.70. Investors use the P/B ratio to look at a stock's market value versus its book value, which is defined as total assets minus total liabilities. By comparison, POL has a P/B of 5.98.
Based on these metrics and many more, WLK holds a Value grade of B, while POL has 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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Westlake Chemical Corporation (WLK) : Free Stock Analysis Report
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