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AXTA or ECL: Which Is the Better Value Stock Right Now?

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Investors looking for stocks in the Chemical - Specialty sector might want to consider either Axalta Coating Systems (AXTA - Free Report) or Ecolab (ECL - Free Report) . But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.

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 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, Axalta Coating Systems has a Zacks Rank of #2 (Buy), while Ecolab has a Zacks Rank of #3 (Hold). Investors should feel comfortable knowing that AXTA likely has seen a stronger improvement to its earnings outlook than ECL has recently. 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 grades stocks based on a number of key metrics, including the tried-and-true P/E ratio, the P/S ratio, earnings yield, and cash flow per share, as well as a variety of other fundamentals that value investors frequently use.

AXTA currently has a forward P/E ratio of 17.21, while ECL has a forward P/E of 33.98. We also note that AXTA 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. ECL currently has a PEG ratio of 2.73.

Another notable valuation metric for AXTA is its P/B ratio of 5.41. 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, ECL has a P/B of 6.99.

These are just a few of the metrics contributing to AXTA's Value grade of A and ECL's Value grade of D.

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


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