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DOW vs. PPG: Which Stock Is the Better Value Option?

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Investors interested in Chemical - Diversified stocks are likely familiar with Dow Inc. (DOW - Free Report) and PPG Industries (PPG - 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.

Dow Inc. and PPG Industries are both sporting a Zacks Rank of # 2 (Buy) right now. The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that both of these companies have improving earnings outlooks. However, value investors will care about much more than just this.

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.

DOW currently has a forward P/E ratio of 8.75, while PPG has a forward P/E of 20.62. We also note that DOW has a PEG ratio of 0.32. 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. PPG currently has a PEG ratio of 1.12.

Another notable valuation metric for DOW is its P/B ratio of 3.18. 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, PPG has a P/B of 6.71.

These are just a few of the metrics contributing to DOW's Value grade of A and PPG's Value grade of C.

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


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