Investors looking for stocks in the Chemical – Specialty sector might want to consider either Israel Chemicals (ICL) or Ingevity Corporation (NGVT). But which of these two companies is the best option for those looking for undervalued stocks? 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 puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
Currently, both Israel Chemicals and Ingevity Corporation are holding a Zacks Rank of # 2 (Buy). Investors should feel comfortable knowing that both of these stocks have an improving earnings outlook since the Zacks Rank favors companies that have witnessed positive analyst estimate revisions. But this is just one piece of the puzzle for value investors.
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.
Our Value category highlights undervalued companies by looking at a variety of key metrics, including the popular P/E ratio, as well as the P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that have been used by value investors for years.
ICL currently has a forward P/E ratio of 15.03, while NGVT has a forward P/E of 20.71. We also note that ICL has a PEG ratio of 1.58. 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. NGVT currently has a PEG ratio of 1.73.
Another notable valuation metric for ICL is its P/B ratio of 1.85. 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, NGVT has a P/B of 10.38.
Based on these metrics and many more, ICL holds a Value grade of B, while NGVT has a Value grade of D.
Both ICL and NGVT are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that ICL is the superior value option right now.
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