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OLN vs. ALB: Which Stock Is the Better Value Option?

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Investors looking for stocks in the Chemical - Diversified sector might want to consider either Olin (OLN - Free Report) or Albemarle (ALB - Free Report) . But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.

There are plenty of strategies for discovering value stocks, but we have found that pairing a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system produces the best returns. The proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.

Olin has a Zacks Rank of #1 (Strong Buy), while Albemarle has a Zacks Rank of #3 (Hold) right now. Investors should feel comfortable knowing that OLN likely has seen a stronger improvement to its earnings outlook than ALB has recently. However, value investors will care about much more than just this.

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.

The Style Score Value grade factors in a variety of key fundamental metrics, including the popular P/E ratio, P/S ratio, earnings yield, cash flow per share, and a number of other key stats that are commonly used by value investors.

OLN currently has a forward P/E ratio of 7.16, while ALB has a forward P/E of 71.03. We also note that OLN has a PEG ratio of 0.13. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. ALB currently has a PEG ratio of 3.22.

Another notable valuation metric for OLN is its P/B ratio of 4.13. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. For comparison, ALB has a P/B of 5.45.

Based on these metrics and many more, OLN holds a Value grade of A, while ALB has a Value grade of D.

OLN 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 OLN is likely the superior value option right now.


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