Investors interested in Chemical - Specialty stocks are likely familiar with Israel Chemicals (ICL - Free Report) and Ingevity Corporation (NGVT - Free Report) . But which of these two companies is the best option for those looking for undervalued stocks? Let's take a closer look.
Everyone has their own methods for finding great value opportunities, but our model includes pairing an impressive grade in the Value category of our Style Scores system with a strong Zacks Rank. The proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
Israel Chemicals has a Zacks Rank of #2 (Buy), while Ingevity Corporation has a Zacks Rank of #3 (Hold) right now. Investors should feel comfortable knowing that ICL likely has seen a stronger improvement to its earnings outlook than NGVT has recently. But this is only part of the picture for value investors.
Value investors analyze a variety of traditional, tried-and-true metrics to help find companies 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.
ICL currently has a forward P/E ratio of 12.61, while NGVT has a forward P/E of 19.34. We also note that ICL has a PEG ratio of 1.33. 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. NGVT currently has a PEG ratio of 1.61.
Another notable valuation metric for ICL is its P/B ratio of 1.72. 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, NGVT has a P/B of 10.78.
These metrics, and several others, help ICL earn a Value grade of B, while NGVT has been given a Value grade of D.
ICL has seen stronger estimate revision activity and sports more attractive valuation metrics than NGVT, so it seems like value investors will conclude that ICL is the superior option right now.