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BASFY vs. PPG: Which Stock Is the Better Value Option?

Zacks Equity Research
·2-min read

Investors interested in Chemical - Diversified stocks are likely familiar with BASF SE (BASFY) and PPG Industries (PPG). But which of these two companies is the best option for those looking for undervalued stocks? Let's take a closer look.

Everyone has their own methods for finding great value opportunities, but our model includes pairing an impressive grade in the Value category of our Style Scores system with a strong Zacks Rank. The Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.

BASF SE has a Zacks Rank of #1 (Strong Buy), while PPG Industries has a Zacks Rank of #4 (Sell) right now. This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that BASFY is likely seeing its earnings outlook improve to a greater extent. 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.

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The Style Score Value grade factors in a variety of key fundamental metrics, including the popular P/E ratio, P/S ratio, earnings yield, cash flow per share, and a number of other key stats that are commonly used by value investors.

BASFY currently has a forward P/E ratio of 10.10, while PPG has a forward P/E of 22.30. We also note that BASFY has a PEG ratio of 0.67. 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. PPG currently has a PEG ratio of 1.13.

Another notable valuation metric for BASFY is its P/B ratio of 1.51. 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, PPG has a P/B of 5.73.

Based on these metrics and many more, BASFY holds a Value grade of B, while PPG has a Value grade of C.

BASFY 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 BASFY is likely the superior value option right now.


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BASF SE (BASFY) : Free Stock Analysis Report
 
PPG Industries, Inc. (PPG) : Free Stock Analysis Report
 
To read this article on Zacks.com click here.
 
Zacks Investment Research