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CC vs. PPG: Which Stock Should Value Investors Buy Now?
Investors interested in stocks from the Chemical - Diversified sector have probably already heard of Chemours (CC - Free Report) and PPG Industries (PPG - Free Report) . But which of these two stocks presents investors with the better value opportunity right now? 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 emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.
Chemours has a Zacks Rank of #2 (Buy), while PPG Industries has a Zacks Rank of #4 (Sell) right now. Investors should feel comfortable knowing that CC likely has seen a stronger improvement to its earnings outlook than PPG 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.
CC currently has a forward P/E ratio of 5.94, while PPG has a forward P/E of 18.34. We also note that CC has a PEG ratio of 0.41. This figure is similar to the commonly-used P/E ratio, with the PEG ratio also factoring in a company's expected earnings growth rate. PPG currently has a PEG ratio of 2.54.
Another notable valuation metric for CC is its P/B ratio of 4.24. The P/B is a method of comparing a stock's market value to its book value, which is defined as total assets minus total liabilities. By comparison, PPG has a P/B of 4.62.
These metrics, and several others, help CC earn a Value grade of A, while PPG has been given a Value grade of D.
CC has seen stronger estimate revision activity and sports more attractive valuation metrics than PPG, so it seems like value investors will conclude that CC is the superior option right now.