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ESI vs. AXTA: Which Stock Should Value Investors Buy Now?

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Investors with an interest in Chemical - Specialty stocks have likely encountered both Element Solutions (ESI - Free Report) and Axalta Coating Systems (AXTA - Free Report) . 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.

Everyone has their own methods for finding great value opportunities, but our model includes pairing an impressive grade in the Value category of our Style Scores system with a strong Zacks Rank. The proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.

Element Solutions and Axalta Coating Systems are sporting Zacks Ranks of #2 (Buy) and #3 (Hold), respectively, right now. This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that ESI is likely seeing its earnings outlook improve to a greater extent. But this is just one piece of the puzzle for value investors.

Value investors are also interested in a number of tried-and-true valuation metrics that help show when a company is undervalued at its current share price levels.

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.

ESI currently has a forward P/E ratio of 13.56, while AXTA has a forward P/E of 30.81. We also note that ESI has a PEG ratio of 2.24. 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. AXTA currently has a PEG ratio of 18.79.

Another notable valuation metric for ESI is its P/B ratio of 1.27. 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, AXTA has a P/B of 4.22.

These metrics, and several others, help ESI earn a Value grade of B, while AXTA has been given a Value grade of D.

ESI 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 ESI is likely the superior value option right now.


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