Investors looking for stocks in the Chemical - Specialty sector might want to consider either Novozymes A/S (NVZMY) or Hawkins (HWKN). 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.
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.
Currently, Novozymes A/S has a Zacks Rank of #2 (Buy), while Hawkins has a Zacks Rank of #3 (Hold). Investors should feel comfortable knowing that NVZMY likely has seen a stronger improvement to its earnings outlook than HWKN has recently. 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.
NVZMY currently has a forward P/E ratio of 24.53, while HWKN has a forward P/E of 31.23. We also note that NVZMY has a PEG ratio of 1.11. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. HWKN currently has a PEG ratio of 1.95.
Another notable valuation metric for NVZMY is its P/B ratio of 2.26. 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, HWKN has a P/B of 5.04.
These metrics, and several others, help NVZMY earn a Value grade of B, while HWKN has been given a Value grade of C.
NVZMY 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 NVZMY is likely the superior value 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.
