Which stock offers the better value option?

Investors interested in chemicals stocks are likely familiar with Huntsman (HUN) and Koninklijke DSM NV (RDSMY). 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 combine a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system. The Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.

Currently, Huntsman has a Zacks Rank of #1 (Strong Buy), while Koninklijke DSM NV has a Zacks Rank of #3 (Hold). This system places emphasis on companies that have seen positive earnings estimate revisions, so investors can be confident that HUN’s earnings outlook is likely to improve on a larger scale. But that’s just one of the factors of interest to value investors.

Value investors also tend to use a set of traditional, tried-and-tested numbers to find stocks that they believe are undervalued at their current price levels.

Our Value category highlights undervalued companies by looking at a number of key metrics, including the popular P/E ratio, as well as P/S, earnings yield, cash flow per share, and a number of other fundamental metrics that value investors have used for years.

HUN currently has a forward P/E ratio of 13.05, while RDSMY has a forward P/E ratio of 29.83. We also note that HUN has a PEG ratio of 1.47. This popular number is similar to the widely used P/E ratio, but the PEG ratio also takes into account a company’s expected EPS growth rate. RDSMY currently has a PEG ratio of 2.24.

Another important valuation metric for HUN is its P/B ratio of 1.73. P/B is a method of comparing a stock’s market value to its book value, which is defined as total assets minus total liabilities. For comparison, RDSMY has a P/B ratio of 3.71.

These are just some of the metrics that contribute to the B score for HUN and the D score for RDSMY.

HUN currently has an improving earnings outlook, which makes it stand out in our Zacks Rank model. And based on the valuation metrics mentioned above, we believe HUN is probably the better value option right now.

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Koninklijke DSM NV (RDSMY): Free Stock Analysis Report

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