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CBT or APD: Which Is the Better Value Stock Right Now?

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Investors with an interest in Chemical - Diversified stocks have likely encountered both Cabot (CBT - Free Report) and Air Products and Chemicals (APD - Free Report) . But which of these two companies is the best option for those looking for undervalued stocks? 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.

Currently, Cabot has a Zacks Rank of #2 (Buy), while Air Products and Chemicals has a Zacks Rank of #3 (Hold). This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that CBT is likely seeing its earnings outlook improve to a greater extent. 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.

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.

CBT currently has a forward P/E ratio of 14.07, while APD has a forward P/E of 22.52. We also note that CBT has a PEG ratio of 0.95. 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. APD currently has a PEG ratio of 3.70.

Another notable valuation metric for CBT is its P/B ratio of 3.57. 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, APD has a P/B of 3.70.

Based on these metrics and many more, CBT holds a Value grade of A, while APD has a Value grade of D.

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


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