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IOSP vs. APD: Which Stock Is the Better Value Option?

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Investors with an interest in Chemical - Diversified stocks have likely encountered both Innospec (IOSP - Free Report) and Air Products and Chemicals (APD - 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.

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 Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.

Right now, Innospec is sporting a Zacks Rank of #2 (Buy), while Air Products and Chemicals 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 IOSP has an improving earnings outlook. But this is just one piece of the puzzle for value investors.

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 highlights undervalued companies by looking at a variety of key metrics, including the popular P/E ratio, as well as the P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that have been used by value investors for years.

IOSP currently has a forward P/E ratio of 17.48, while APD has a forward P/E of 22.43. We also note that IOSP has a PEG ratio of 2.33. 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. APD currently has a PEG ratio of 2.69.

Another notable valuation metric for IOSP is its P/B ratio of 1.56. 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, APD has a P/B of 3.64.

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

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

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