Investors interested in Paper and Related Products stocks are likely familiar with Suzano S.A. Sponsored ADR (SUZ) and International Paper (IP). But which of these two stocks presents investors with the better value opportunity right now? Let's take a closer look.
We have found that the best way to discover great value opportunities is to pair a strong Zacks Rank with a great grade in the Value category of our Style Scores system. The Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.
Suzano S.A. Sponsored ADR has a Zacks Rank of #2 (Buy), while International Paper has a Zacks Rank of #3 (Hold) right now. This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that SUZ is likely seeing its earnings outlook improve to a greater extent. But this is only part of the picture for value investors.
Value investors analyze a variety of traditional, tried-and-true metrics to help find companies that they believe are undervalued at their current share price levels.
Our Value category highlights undervalued companies by looking at a variety of key metrics, including the popular P/E ratio, as well as the P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that have been used by value investors for years.
SUZ currently has a forward P/E ratio of 4.47, while IP has a forward P/E of 17.75. We also note that SUZ has a PEG ratio of 0.08. 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. IP currently has a PEG ratio of 0.34.
Another notable valuation metric for SUZ is its P/B ratio of 2.09. 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, IP has a P/B of 2.19.
These are just a few of the metrics contributing to SUZ's Value grade of A and IP's Value grade of C.
SUZ stands above IP thanks to its solid earnings outlook, and based on these valuation figures, we also feel that SUZ is the superior value option right now.
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International Paper Company (IP) : Free Stock Analysis Report
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.
