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BASFY vs. RDSMY: Which Stock Should Value Investors Buy Now?

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Investors looking for stocks in the Chemical - Diversified sector might want to consider either BASF SE (BASFY - Free Report) or Koninklijke DSM NV . But which of these two companies is the best option for those looking for undervalued stocks? Let's take a closer look.

The best way to find great value stocks is to pair a strong Zacks Rank with an impressive 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.

BASF SE has a Zacks Rank of #2 (Buy), while Koninklijke DSM NV has a Zacks Rank of #3 (Hold) right now. Investors should feel comfortable knowing that BASFY likely has seen a stronger improvement to its earnings outlook than RDSMY 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 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.

BASFY currently has a forward P/E ratio of 16.92, while RDSMY has a forward P/E of 28.36. We also note that BASFY has a PEG ratio of 1.69. 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 1.91.

Another notable valuation metric for BASFY is its P/B ratio of 1.95. Investors use the P/B ratio to look at a stock's market value versus its book value, which is defined as total assets minus total liabilities. By comparison, RDSMY has a P/B of 3.54.

These metrics, and several others, help BASFY earn a Value grade of B, while RDSMY has been given a Value grade of C.

BASFY stands above RDSMY thanks to its solid earnings outlook, and based on these valuation figures, we also feel that BASFY is the superior value option right now.


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