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PROPERTY:

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NHYDY vs. SKFRY: Which Stock Should Value Investors Buy Now?

Zacks Equity Research
·2-min read

Investors looking for stocks in the Metal Products - Procurement and Fabrication sector might want to consider either Norsk Hydro ASA (NHYDY) or AB SKF (SKFRY). 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 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.

Right now, Norsk Hydro ASA is sporting a Zacks Rank of #2 (Buy), while AB SKF has a Zacks Rank of #5 (Strong Sell). This means that NHYDY's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. But this is just one piece of the puzzle 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.

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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.

NHYDY currently has a forward P/E ratio of 5.85, while SKFRY has a forward P/E of 9.87. We also note that NHYDY has a PEG ratio of 0.28. 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. SKFRY currently has a PEG ratio of 2.47.

Another notable valuation metric for NHYDY is its P/B ratio of 1.17. 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, SKFRY has a P/B of 1.18.

These metrics, and several others, help NHYDY earn a Value grade of A, while SKFRY has been given a Value grade of C.

NHYDY has seen stronger estimate revision activity and sports more attractive valuation metrics than SKFRY, so it seems like value investors will conclude that NHYDY is the superior option right now.


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Norsk Hydro ASA (NHYDY) : Free Stock Analysis Report
 
AB SKF (SKFRY) : Free Stock Analysis Report
 
To read this article on Zacks.com click here.
 
Zacks Investment Research