Investors with an interest in Chemical - Specialty stocks have likely encountered both Quaker Chemical (KWR) and Linde (LIN). 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 puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
Currently, Quaker Chemical has a Zacks Rank of #2 (Buy), while Linde 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 KWR has an improving earnings outlook. However, value investors will care about much more than just this.
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.
KWR currently has a forward P/E ratio of 19.57, while LIN has a forward P/E of 26.08. We also note that KWR has a PEG ratio of 1.56. 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. LIN currently has a PEG ratio of 3.29.
Another notable valuation metric for KWR is its P/B ratio of 1.76. 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, LIN has a P/B of 4.99.
These are just a few of the metrics contributing to KWR's Value grade of A and LIN's Value grade of D.
KWR sticks out from LIN in both our Zacks Rank and Style Scores models, so value investors will likely feel that KWR is the better option right now.
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This article originally published on Zacks Investment Research (zacks.com).
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
