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AXTA vs. ECL: Which Stock Should Value Investors Buy Now?

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·2-min read
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Investors looking for stocks in the Chemical - Specialty sector might want to consider either Axalta Coating Systems (AXTA) or Ecolab (ECL). 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 proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.

Right now, Axalta Coating Systems is sporting a Zacks Rank of #2 (Buy), while Ecolab has a Zacks Rank of #3 (Hold). This means that AXTA's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. But this is just one factor that value investors are interested in.

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.

The Value category of the Style Scores system identifies undervalued companies by looking at a number of key metrics. These include the long-favored P/E ratio, P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that help us determine a company's fair value.

AXTA currently has a forward P/E ratio of 15.72, while ECL has a forward P/E of 44.31. We also note that AXTA has a PEG ratio of 0.71. 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. ECL currently has a PEG ratio of 4.07.

Another notable valuation metric for AXTA is its P/B ratio of 5.33. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. For comparison, ECL has a P/B of 10.17.

These metrics, and several others, help AXTA earn a Value grade of B, while ECL has been given a Value grade of D.

AXTA sticks out from ECL in both our Zacks Rank and Style Scores models, so value investors will likely feel that AXTA is the better option right now.


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Axalta Coating Systems Ltd. (AXTA) : Free Stock Analysis Report
 
Ecolab Inc. (ECL) : Free Stock Analysis Report
 
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