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HUN vs. APD: Which Stock Is the Better Value Option?

Zacks

Investors interested in stocks from the Chemical – Diversified sector have probably already heard of Huntsman (HUN) and 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 emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.

Both Huntsman and Air Products and Chemicals have a Zacks Rank of # 1 (Strong Buy) right now. This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that these stocks have improving earnings outlooks. 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.


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.

HUN currently has a forward P/E ratio of 6.76, while APD has a forward P/E of 19.67. We also note that HUN has a PEG ratio of 0.80. 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. APD currently has a PEG ratio of 1.48.

Another notable valuation metric for HUN is its P/B ratio of 1.40. 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 3.26.

These metrics, and several others, help HUN earn a Value grade of A, while APD has been given a Value grade of D.

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


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