Investors interested in stocks from the Chemical - Specialty sector have probably already heard of Westlake Chemical Partners (WLKP - Free Report) and Platform Specialty Products (PAH - 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 puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
Currently, Westlake Chemical Partners has a Zacks Rank of #2 (Buy), while Platform Specialty Products 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 WLKP is likely seeing its earnings outlook improve to a greater extent. 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 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.
WLKP currently has a forward P/E ratio of 12.74, while PAH has a forward P/E of 16.15. We also note that WLKP has a PEG ratio of 4.57. 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. PAH currently has a PEG ratio of 7.24.
Another notable valuation metric for WLKP is its P/B ratio of 0.80. 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, PAH has a P/B of 1.52.
Based on these metrics and many more, WLKP holds a Value grade of A, while PAH has a Value grade of D.
WLKP has seen stronger estimate revision activity and sports more attractive valuation metrics than PAH, so it seems like value investors will conclude that WLKP is the superior option right now.