Investors interested in stocks from the Chemical - Specialty sector have probably already heard of Axalta Coating Systems (AXTA) and Novozymes AS (NVZMY). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.
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.
Axalta Coating Systems has a Zacks Rank of #2 (Buy), while Novozymes AS has a Zacks Rank of #3 (Hold) right now. This means that AXTA'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.
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 15.94, while NVZMY has a forward P/E of 41.65. We also note that AXTA has a PEG ratio of 0.72. 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. NVZMY currently has a PEG ratio of 9.05.
Another notable valuation metric for AXTA is its P/B ratio of 5.41. 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, NVZMY has a P/B of 12.54.
These are just a few of the metrics contributing to AXTA's Value grade of B and NVZMY's Value grade of D.
AXTA sticks out from NVZMY 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
Novozymes AS (NVZMY) : Free Stock Analysis Report
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