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FOE vs. VSM: Which Stock Should Value Investors Buy Now?

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Investors interested in Chemical - Specialty stocks are likely familiar with Ferro and Versum Materials . But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.

The best way to find great value stocks is to pair a strong Zacks Rank with an impressive 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, Ferro is sporting a Zacks Rank of #2 (Buy), while Versum Materials has a Zacks Rank of #3 (Hold). This means that FOE's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. But this is only part of the picture 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.

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.

FOE currently has a forward P/E ratio of 13.61, while VSM has a forward P/E of 15.71. We also note that FOE has a PEG ratio of 0.87. 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. VSM currently has a PEG ratio of 1.21.

Another notable valuation metric for FOE is its P/B ratio of 4.74. The P/B ratio is used to compare a stock's market value with its book value, which is defined as total assets minus total liabilities. For comparison, VSM has a P/B of 25.48.

These metrics, and several others, help FOE earn a Value grade of B, while VSM has been given a Value grade of C.

FOE has seen stronger estimate revision activity and sports more attractive valuation metrics than VSM, so it seems like value investors will conclude that FOE is the superior option right now.