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OLN vs. RDSMY: Which Stock Should Value Investors Buy Now?

Zacks Equity Research
·2-min read

Investors looking for stocks in the Chemical - Diversified sector might want to consider either Olin (OLN) or Koninklijke DSM NV (RDSMY). But which of these two stocks presents investors with the better value opportunity right now? Let's take a closer look.

There are plenty of strategies for discovering value stocks, but we have found that pairing a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system produces the best returns. The proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.

Olin and Koninklijke DSM NV are sporting Zacks Ranks of #1 (Strong Buy) and #4 (Sell), respectively, right now. This means that OLN's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. However, value investors will care about much more than just this.

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.

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Our Value category grades stocks based on a number of key metrics, including the tried-and-true P/E ratio, the P/S ratio, earnings yield, and cash flow per share, as well as a variety of other fundamentals that value investors frequently use.

OLN currently has a forward P/E ratio of 7.24, while RDSMY has a forward P/E of 36.65. We also note that OLN has a PEG ratio of 0.14. 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. RDSMY currently has a PEG ratio of 2.51.

Another notable valuation metric for OLN is its P/B ratio of 3.79. 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, RDSMY has a P/B of 3.80.

These are just a few of the metrics contributing to OLN's Value grade of A and RDSMY's Value grade of C.

OLN has seen stronger estimate revision activity and sports more attractive valuation metrics than RDSMY, so it seems like value investors will conclude that OLN is the superior option right now.


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Olin Corporation (OLN) : Free Stock Analysis Report
 
Koninklijke DSM NV (RDSMY) : Free Stock Analysis Report
 
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Zacks Investment Research