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E vs. BAK: Which Stock Should Value Investors Buy Now?

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Investors with an interest in Oil and Gas - Integrated - International stocks have likely encountered both Eni SpA (E - Free Report) and Braskem (BAK - Free Report) . But which of these two companies is the best option for those looking for undervalued stocks? Let's 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 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.

Eni SpA has a Zacks Rank of #1 (Strong Buy), while Braskem has a Zacks Rank of #5 (Strong Sell) right now. The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that E has an improving earnings outlook. But this is just one factor that value investors are interested in.

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 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.

E currently has a forward P/E ratio of 4.78, while BAK has a forward P/E of 5. We also note that E has a PEG ratio of 0.46. 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. BAK currently has a PEG ratio of 0.52.

Another notable valuation metric for E is its P/B ratio of 1.03. Investors use the P/B ratio to look at a stock's market value versus its book value, which is defined as total assets minus total liabilities. By comparison, BAK has a P/B of 5.67.

Based on these metrics and many more, E holds a Value grade of A, while BAK has a Value grade of C.

E 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 E is likely the superior value option right now.


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