CBT vs. APD: Which Stock Is the Better Value Option?
In This Article:
Investors interested in stocks from the Chemical - Diversified sector have probably already heard of Cabot (CBT) and Air Products and Chemicals (APD). 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 favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.
Right now, Cabot is sporting a Zacks Rank of #2 (Buy), while Air Products and Chemicals has a Zacks Rank of #4 (Sell). This means that CBT's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. 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.
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 14.18, while APD has a forward P/E of 23.47. We also note that CBT has a PEG ratio of 0.93. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. APD currently has a PEG ratio of 3.85.
Another notable valuation metric for CBT is its P/B ratio of 4.09. 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, APD has a P/B of 4.17.
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.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Cabot Corporation (CBT) : Free Stock Analysis Report
Air Products and Chemicals, Inc. (APD) : Free Stock Analysis Report