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AXTA or NVZMY: Which Is the Better Value Stock Right Now?
Investors with an interest in Chemical - Specialty stocks have likely encountered both Axalta Coating Systems (AXTA - Free Report) and Novozymes A/S (NVZMY - Free Report) . But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.
Everyone has their own methods for finding great value opportunities, but our model includes pairing an impressive grade in the Value category of our Style Scores system with a strong Zacks Rank. 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.
Axalta Coating Systems and Novozymes A/S are sporting Zacks Ranks of #1 (Strong Buy) and #2 (Buy), respectively, right now. Investors should feel comfortable knowing that AXTA likely has seen a stronger improvement to its earnings outlook than NVZMY 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.
The Value category of the Style Scores system identifies undervalued companies by looking at a number of key metrics. These include the long-favored P/E ratio, P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that help us determine a company's fair value.
AXTA currently has a forward P/E ratio of 14.40, while NVZMY has a forward P/E of 28.56. We also note that AXTA has a PEG ratio of 0.93. This figure is similar to the commonly-used P/E ratio, with the PEG ratio also factoring in a company's expected earnings growth rate. NVZMY currently has a PEG ratio of 2.93.
Another notable valuation metric for AXTA is its P/B ratio of 4.04. 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, NVZMY has a P/B of 13.55.
Based on these metrics and many more, AXTA holds a Value grade of B, while NVZMY has a Value grade of F.
AXTA has seen stronger estimate revision activity and sports more attractive valuation metrics than NVZMY, so it seems like value investors will conclude that AXTA is the superior option right now.