CMP vs. TROX: Which Stock Is the Better Value Option?
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Investors with an interest in Chemical - Diversified stocks have likely encountered both Compass Minerals (CMP) and Tronox (TROX). 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.
Compass Minerals has a Zacks Rank of #2 (Buy), while Tronox has a Zacks Rank of #4 (Sell) right now. Investors should feel comfortable knowing that CMP likely has seen a stronger improvement to its earnings outlook than TROX has recently. But this is only part of the picture for value investors.
Value investors also tend to look at a number of traditional, tried-and-true figures to help them find stocks 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.
CMP currently has a forward P/E ratio of 22.52, while TROX has a forward P/E of 25.98. We also note that CMP has a PEG ratio of 0.55. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. TROX currently has a PEG ratio of 21.12.
Another notable valuation metric for CMP is its P/B ratio of 1.32. 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, TROX has a P/B of 1.42.
These are just a few of the metrics contributing to CMP's Value grade of A and TROX's Value grade of D.
CMP 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 CMP is likely the superior value option right now.
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Compass Minerals International, Inc. (CMP) : Free Stock Analysis Report
Tronox Holdings PLC (TROX) : Free Stock Analysis Report