Back to top

Image: Bigstock

DOW vs. PPG: Which Stock Should Value Investors Buy Now?

Read MoreHide Full Article

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 companies is the best option for those looking for undervalued stocks? Let's take a closer look.

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.

Dow Inc. has a Zacks Rank of #2 (Buy), while PPG Industries has a Zacks Rank of #3 (Hold) right now. The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that DOW 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.

DOW currently has a forward P/E ratio of 8.34, while PPG has a forward P/E of 16.74. We also note that DOW has a PEG ratio of 0.28. 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. PPG currently has a PEG ratio of 1.40.

Another notable valuation metric for DOW is its P/B ratio of 2.55. 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, PPG has a P/B of 4.46.

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

DOW sticks out from PPG in both our Zacks Rank and Style Scores models, so value investors will likely feel that DOW is the better option right now.


See More Zacks Research for These Tickers


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


PPG Industries, Inc. (PPG) - free report >>

Dow Inc. (DOW) - free report >>

Published in