Investors interested in stocks from the Chemical - Specialty sector have probably already heard of Israel Chemicals (ICL) and Ingevity Corporation (NGVT). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.
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.
Right now, Israel Chemicals is sporting a Zacks Rank of #2 (Buy), while Ingevity Corporation 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 ICL has an improving earnings outlook. 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 grades stocks based on a number of key metrics, including the tried-and-true P/E ratio, the P/S ratio, earnings yield, and cash flow per share, as well as a variety of other fundamentals that value investors frequently use.
ICL currently has a forward P/E ratio of 14.70, while NGVT has a forward P/E of 20.57. We also note that ICL has a PEG ratio of 1.55. 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. NGVT currently has a PEG ratio of 1.71.
Another notable valuation metric for ICL is its P/B ratio of 1.96. 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, NGVT has a P/B of 12.53.
These are just a few of the metrics contributing to ICL's Value grade of B and NGVT's Value grade of D.
ICL stands above NGVT thanks to its solid earnings outlook, and based on these valuation figures, we also feel that ICL is the superior value option right now.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Israel Chemicals Shs (ICL): Free Stock Analysis Report Ingevity Corporation (NGVT): Free Stock Analysis Report To read this article on Zacks.com click here.