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PKX vs. SID: Which Stock Should Value Investors Buy Now?

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Investors interested in stocks from the Steel - Producers sector have probably already heard of Posco (PKX - Free Report) and Siderurgica Nacional (SID - 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 proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.

Right now, Posco is sporting a Zacks Rank of #2 (Buy), while Siderurgica Nacional has a Zacks Rank of #4 (Sell). The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that PKX has an improving earnings outlook. But this is only part of the picture for value investors.

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.

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.

PKX currently has a forward P/E ratio of 14.48, while SID has a forward P/E of 16.76. We also note that PKX has a PEG ratio of 0.54. 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. SID currently has a PEG ratio of 0.63.

Another notable valuation metric for PKX is its P/B ratio of 0.43. 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, SID has a P/B of 0.86.

Based on these metrics and many more, PKX holds a Value grade of B, while SID has a Value grade of C.

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


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