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

Investors looking for stocks in the Chemical - Diversified sector might want to consider either Akzo Nobel NV (AKZOY) or Air Products and Chemicals (APD). But which of these two stocks presents investors with the better value opportunity right now? Let's take a closer look.

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 proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.

Currently, both Akzo Nobel NV and Air Products and Chemicals are holding a Zacks Rank of #2 (Buy). Investors should feel comfortable knowing that both of these stocks have an improving earnings outlook since the Zacks Rank favors companies that have witnessed positive analyst estimate revisions. 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.

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.

AKZOY currently has a forward P/E ratio of 16.54, while APD has a forward P/E of 22.34. We also note that AKZOY has a PEG ratio of 1.95. 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. APD currently has a PEG ratio of 2.61.

Another notable valuation metric for AKZOY is its P/B ratio of 2.13. 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, APD has a P/B of 4.02.

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

Both AKZOY and APD are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that AKZOY is the superior value option right now.

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This article originally published on Zacks Investment Research (zacks.com).

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