Investors looking for stocks in the Chemical - Specialty sector might want to consider either Daqo New Energy (DQ - Free Report) or Quaker Chemical (KWR - 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.
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 is a proven strategy that targets companies with positive earnings estimate revision trends, while our Style Scores work to grade companies based on specific traits.
Currently, Daqo New Energy has a Zacks Rank of #2 (Buy), while Quaker Chemical has a Zacks Rank of #4 (Sell). Investors should feel comfortable knowing that DQ likely has seen a stronger improvement to its earnings outlook than KWR has recently. But this is just one factor that value investors are interested in.
Value investors also tend to look at a number of traditional, tried-and-true figures to help them find stocks that they believe are undervalued at their 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.
DQ currently has a forward P/E ratio of 8.64, while KWR has a forward P/E of 27.39. We also note that DQ has a PEG ratio of 0.30. 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. KWR currently has a PEG ratio of 2.49.
Another notable valuation metric for DQ is its P/B ratio of 0.71. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. For comparison, KWR has a P/B of 5.97.
Based on these metrics and many more, DQ holds a Value grade of A, while KWR has a Value grade of D.
DQ has seen stronger estimate revision activity and sports more attractive valuation metrics than KWR, so it seems like value investors will conclude that DQ is the superior option right now.