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TROX vs. PPG: Which Stock Is the Better Value Option?

Zacks Equity Research
·2-min read

Investors interested in stocks from the Chemical - Diversified sector have probably already heard of Tronox (TROX) and PPG Industries (PPG). But which of these two stocks offers value investors a better bang for their buck right now? We'll need to 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.

Tronox has a Zacks Rank of #2 (Buy), while PPG Industries has a Zacks Rank of #4 (Sell) right now. The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that TROX has an improving earnings 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.

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The Style Score Value grade factors in a variety of key fundamental metrics, including the popular P/E ratio, P/S ratio, earnings yield, cash flow per share, and a number of other key stats that are commonly used by value investors.

TROX currently has a forward P/E ratio of 4.77, while PPG has a forward P/E of 19.16. We also note that TROX has a PEG ratio of 0.35. 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. PPG currently has a PEG ratio of 2.65.

Another notable valuation metric for TROX is its P/B ratio of 1.05. 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, PPG has a P/B of 4.83.

Based on these metrics and many more, TROX holds a Value grade of A, while PPG has a Value grade of D.

TROX 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 TROX is likely the superior value option right now.


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Tronox Holdings PLC (TROX) : Free Stock Analysis Report
 
PPG Industries, Inc. (PPG) : Free Stock Analysis Report
 
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Zacks Investment Research