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WLKP vs. ESI: Which Stock Is the Better Value Option?

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Investors interested in stocks from the Chemical - Specialty sector have probably already heard of Westlake Chemical Partners (WLKP - Free Report) and Element Solutions (ESI - Free Report) . But which of these two stocks presents investors with the better value opportunity right now? Let's take a closer look.

There are plenty of strategies for discovering value stocks, but we have found that pairing a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system produces the best returns. The proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.

Westlake Chemical Partners has a Zacks Rank of #2 (Buy), while Element Solutions has a Zacks Rank of #3 (Hold) right now. This means that WLKP's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst 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.

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 10.63, while ESI has a forward P/E of 13.54. We also note that WLKP has a PEG ratio of 3.81. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. ESI currently has a PEG ratio of 4.31.

Another notable valuation metric for WLKP is its P/B ratio of 0.79. 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, ESI has a P/B of 1.46.

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

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


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