Investors with an interest in Chemical – Diversified stocks have likely encountered both Arkema SA (ARKAY – Free Report) and Koninklijke DSM NV (RDSMY – Free Report) . But which of these two stocks presents investors with the better value opportunity right now? Let’s 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 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.
Arkema SA and Koninklijke DSM NV are sporting Zacks Ranks of #2 (Buy) and #4 (Sell), respectively, right now. This means that ARKAY’s earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. However, value investors will care about much more than just this.
Value investors also try to analyze a wide range of traditional figures and metrics to help determine whether a company is undervalued at its 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.
ARKAY currently has a forward P/E ratio of 10.88, while RDSMY has a forward P/E of 37.05. We also note that ARKAY has a PEG ratio of 0.33. 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. RDSMY currently has a PEG ratio of 2.50.
Another notable valuation metric for ARKAY is its P/B ratio of 1.48. The P/B ratio is used to compare a stock’s market value with its book value, which is defined as total assets minus total liabilities. For comparison, RDSMY has a P/B of 3.77.
These are just a few of the metrics contributing to ARKAY’s Value grade of A and RDSMY’s Value grade of C.
ARKAY is currently sporting an improving earnings outlook, which makes it stick out in our Zacks Rank model. And, based on the above valuation metrics, we feel that ARKAY is likely the superior value option right now.