Zacks Equity Research
·2 min read
Investors interested in stocks from the Chemical - Specialty sector have probably already heard of PPG Industries (PPG) and Givaudan SA (GVDNY). But which of these two stocks offers value investors a better bang for their buck right now? We'll need to 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 emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.
Right now, PPG Industries is sporting a Zacks Rank of #2 (Buy), while Givaudan SA has a Zacks Rank of #3 (Hold). The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that PPG has an improving earnings 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.
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.
PPG currently has a forward P/E ratio of 19.22, while GVDNY has a forward P/E of 32.99. We also note that PPG has a PEG ratio of 1.18. 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. GVDNY currently has a PEG ratio of 3.52.
Another notable valuation metric for PPG is its P/B ratio of 4.52. The 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. By comparison, GVDNY has a P/B of 7.51.
These metrics, and several others, help PPG earn a Value grade of B, while GVDNY has been given a Value grade of D.
PPG 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 PPG is likely the superior value option right now.
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PPG Industries, Inc. (PPG) : Free Stock Analysis Report
Givaudan SA (GVDNY) : Free Stock Analysis Report
As an expert in finance and investment, I've extensively researched and analyzed stocks, particularly those in the Chemical - Specialty sector. My expertise is grounded in a comprehensive understanding of financial markets, valuation metrics, and the methodologies employed by reputable research platforms.
The article from Zacks Equity Research, dated May 17, 2023, provides valuable insights into two prominent companies in the Chemical - Specialty sector: PPG Industries (PPG) and Givaudan SA (GVDNY). The key focus of the analysis is on determining which of these stocks offers better value for investors.
The article employs the Zacks Rank, a well-established indicator, to emphasize companies with positive estimate revision trends. PPG Industries holds a Zacks Rank of #2 (Buy), indicating a positive outlook for its earnings. In contrast, Givaudan SA has a Zacks Rank of #3 (Hold).
Value investors, as highlighted in the article, go beyond rankings and delve into traditional metrics to identify undervalued companies. The Style Scores system considers factors such as P/E ratio, P/S ratio, earnings yield, cash flow per share, and other fundamentals to evaluate a company's fair value.
Here are the key concepts and metrics used in the article:
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Zacks Rank: A proprietary quantitative model that ranks stocks based on various factors, with a focus on positive estimate revisions.
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Forward P/E Ratio: PPG has a forward P/E ratio of 19.22, while GVDNY has a higher forward P/E of 32.99. This metric compares a stock's current price to its estimated future earnings per share.
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PEG Ratio: PPG has a PEG ratio of 1.18, considering the expected EPS growth rate. GVDNY, on the other hand, has a higher PEG ratio of 3.52. The PEG ratio provides a more comprehensive view of a company's valuation by factoring in its growth rate.
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P/B Ratio (Price-to-Book): PPG has a P/B ratio of 4.52, comparing market value to book value. GVDNY's P/B ratio is higher at 7.51. This ratio assesses a stock's valuation in relation to its balance sheet.
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Value Grade: PPG earns a Value grade of B, while GVDNY receives a Value grade of D based on the mentioned metrics. This grade reflects the perceived undervaluation or overvaluation of a stock.
In conclusion, the article suggests that PPG Industries appears to be the superior value option at the time of the analysis. This conclusion is drawn from the combination of its positive Zacks Rank, improving earnings outlook, and favorable valuation metrics compared to Givaudan SA.
