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

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Investors interested in stocks from the Chemical - Specialty sector have probably already heard of PPG Industries (PPG - Free Report) and Givaudan SA (GVDNY - 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.

We have found that the best way to discover great value opportunities is to pair a strong Zacks Rank with a great grade in the Value category of our Style Scores system. The proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.

Right now, PPG Industries is sporting a Zacks Rank of #2 (Buy), while Givaudan SA has a Zacks Rank of #3 (Hold). The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that PPG has an improving earnings outlook. But this is just one piece of the puzzle for value investors.

Value investors analyze a variety of traditional, tried-and-true metrics to help find companies that they believe are undervalued at their 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.

PPG currently has a forward P/E ratio of 19.22, while GVDNY has a forward P/E of 32.99. We also note that PPG has a PEG ratio of 1.18. 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. GVDNY currently has a PEG ratio of 3.52.

Another notable valuation metric for PPG is its P/B ratio of 4.52. 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, GVDNY has a P/B of 7.51.

These metrics, and several others, help PPG earn a Value grade of B, while GVDNY has been given a Value grade of D.

PPG 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 PPG is likely the superior value option right now.


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