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FUL vs. ECL: Which Stock Should Value Investors Buy Now?

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Investors interested in Chemical - Specialty stocks are likely familiar with H. B. Fuller (FUL - Free Report) and Ecolab (ECL - Free Report) . But which of these two stocks presents investors with the better value opportunity right now? 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 proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.

H. B. Fuller has a Zacks Rank of #2 (Buy), while Ecolab has a Zacks Rank of #3 (Hold) right now. Investors should feel comfortable knowing that FUL likely has seen a stronger improvement to its earnings outlook than ECL has recently. But this is just one factor that value investors are interested in.

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.

FUL currently has a forward P/E ratio of 18.03, while ECL has a forward P/E of 27.79. We also note that FUL 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. ECL currently has a PEG ratio of 2.17.

Another notable valuation metric for FUL is its P/B ratio of 2.61. 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, ECL has a P/B of 5.46.

These metrics, and several others, help FUL earn a Value grade of B, while ECL has been given a Value grade of D.

FUL 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 FUL is likely the superior value option right now.


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Ecolab Inc. (ECL) - free report >>

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