Investors looking for stocks in the Chemical – Diversified sector might want to consider either Huntsman (HUN) or FMC (FMC). But which of these two companies is the best option for those looking for undervalued stocks? Let's take a closer look.
The best way to find great value stocks is to pair a strong Zacks Rank with an impressive 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.
Huntsman and FMC are sporting Zacks Ranks of #2 (Buy) and #3 (Hold), respectively, right now. The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that HUN has an improving earnings outlook. But this is just one factor that value investors are interested in.
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.
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.
HUN currently has a forward P/E ratio of 9.31, while FMC has a forward P/E of 14.73. We also note that HUN has a PEG ratio of 0.18. 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. FMC currently has a PEG ratio of 1.34.
Another notable valuation metric for HUN is its P/B ratio of 1.54. 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, FMC has a P/B of 4.48.
These are just a few of the metrics contributing to HUN's Value grade of A and FMC's Value grade of C.
HUN sticks out from FMC in both our Zacks Rank and Style Scores models, so value investors will likely feel that HUN is the better option right now.
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Huntsman Corporation (HUN) : Free Stock Analysis Report
FMC Corporation (FMC) : Free Stock Analysis Report
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