Investors with an interest in Chemical - Specialty stocks have likely encountered both Daqo New Energy (DQ - Free Report) and 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.
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 Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.
Currently, Daqo New Energy has a Zacks Rank of #1 (Strong Buy), while Quaker Chemical has a Zacks Rank of #3 (Hold). Investors should feel comfortable knowing that DQ likely has seen a stronger improvement to its earnings outlook than KWR has recently. However, value investors will care about much more than just this.
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.
The Style Score Value grade factors in a variety of key fundamental metrics, including the popular P/E ratio, P/S ratio, earnings yield, cash flow per share, and a number of other key stats that are commonly used by value investors.
DQ currently has a forward P/E ratio of 6.62, while KWR has a forward P/E of 24.03. We also note that DQ has a PEG ratio of 0.23. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. KWR currently has a PEG ratio of 1.75.
Another notable valuation metric for DQ is its P/B ratio of 1.10. 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, KWR has a P/B of 2.49.
These are just a few of the metrics contributing to DQ's Value grade of A and KWR's Value grade of D.
DQ stands above KWR thanks to its solid earnings outlook, and based on these valuation figures, we also feel that DQ is the superior value option right now.