Back to top

Image: Bigstock

ICL or FOE: Which Is the Better Value Stock Right Now?

Read MoreHide Full Article

Investors interested in Chemical - Specialty stocks are likely familiar with Israel Chemicals (ICL - Free Report) and Ferro (FOE - 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 proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.

Currently, both Israel Chemicals and Ferro are holding a Zacks Rank of # 2 (Buy). This means that both companies have witnessed positive earnings estimate revisions, so investors should feel comfortable knowing that both of these stocks have an improving earnings outlook. 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.

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.

ICL currently has a forward P/E ratio of 17.36, while FOE has a forward P/E of 21.03. We also note that ICL has a PEG ratio of 0.84. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. FOE currently has a PEG ratio of 2.21.

Another notable valuation metric for ICL is its P/B ratio of 2.08. 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, FOE has a P/B of 3.61.

These metrics, and several others, help ICL earn a Value grade of B, while FOE has been given a Value grade of C.

Both ICL and FOE are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that ICL is the superior value option right now.


In-Depth Zacks Research for the Tickers Above


Normally $25 each - click below to receive one report FREE:


Israel Chemicals Shs (ICL) - free report >>

Ferro Corporation (FOE) - free report >>

Published in