Investors interested in Chemical - Diversified stocks are likely familiar with Avient (AVNT) 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.
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 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.
Avient has a Zacks Rank of #2 (Buy), while PPG Industries has a Zacks Rank of #3 (Hold) right now. This means that AVNT's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. 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.
AVNT currently has a forward P/E ratio of 17.24, while PPG has a forward P/E of 24.23. We also note that AVNT has a PEG ratio of 2.44. 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. PPG currently has a PEG ratio of 4.83.
Another notable valuation metric for AVNT is its P/B ratio of 1.51. 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, PPG has a P/B of 5.74.
Based on these metrics and many more, AVNT holds a Value grade of B, while PPG has a Value grade of C.
AVNT sticks out from PPG in both our Zacks Rank and Style Scores models, so value investors will likely feel that AVNT is the better option right now.
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