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UFS vs. NP: Which Stock Is the Better Value Option?

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Investors with an interest in Paper and Related Products stocks have likely encountered both Domtar and Neenah Paper . 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 proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.

Currently, Domtar has a Zacks Rank of #2 (Buy), while Neenah Paper has a Zacks Rank of #3 (Hold). This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that UFS is likely seeing its earnings outlook improve to a greater extent. However, value investors will care about much more than just this.

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.

UFS currently has a forward P/E ratio of 11.91, while NP has a forward P/E of 18.56. We also note that UFS has a PEG ratio of 2.38. 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. NP currently has a PEG ratio of 3.71.

Another notable valuation metric for UFS is its P/B ratio of 1.16. 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, NP has a P/B of 3.36.

These metrics, and several others, help UFS earn a Value grade of A, while NP has been given a Value grade of C.

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

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