Markets

CE vs. VSM: Which Stock Is the Better Value Option?

A generic image of a pen on a chart
Credit: Shutterstock photo

Investors looking for stocks in the Chemical - Specialty sector might want to consider either Celanese (CE) or Versum Materials (VSM). But which of these two stocks presents investors with the better value opportunity right now? Let's take a closer look.

Everyone has their own methods for finding great value opportunities, but our model includes pairing an impressive grade in the Value category of our Style Scores system with a strong Zacks Rank. The Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.

Currently, Celanese has a Zacks Rank of #2 (Buy), while Versum Materials has a Zacks Rank of #4 (Sell). This means that CE'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 also try to analyze a wide range of traditional figures and metrics to help determine whether a company is undervalued at its 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.

CE currently has a forward P/E ratio of 8.47, while VSM has a forward P/E of 11.46. We also note that CE has a PEG ratio of 0.85. 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. VSM currently has a PEG ratio of 0.88.

Another notable valuation metric for CE is its P/B ratio of 3.20. 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, VSM has a P/B of 20.09.

Based on these metrics and many more, CE holds a Value grade of A, while VSM has a Value grade of C.

CE has seen stronger estimate revision activity and sports more attractive valuation metrics than VSM, so it seems like value investors will conclude that CE is the superior 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

Celanese Corporation (CE): Free Stock Analysis Report

Versum Materials Inc. (VSM): Free Stock Analysis Report

To read this article on Zacks.com click here.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

In This Story

CE

Other Topics

Investing Stocks

Latest Markets Videos

Zacks

Zacks is the leading investment research firm focusing on stock research, analysis and recommendations. In 1978, our founder discovered the power of earnings estimate revisions to enable profitable investment decisions. Today, that discovery is still the heart of the Zacks Rank. A wealth of resources for individual investors is available at www.zacks.com.

Learn More