Investors looking for stocks in the Chemical - Specialty sector might want to consider either Axalta Coating Systems (AXTA) or Hawkins (HWKN). But which of these two companies is the best option for those looking for undervalued stocks? 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 emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.

Axalta Coating Systems has a Zacks Rank of #1 (Strong Buy), while Hawkins has a Zacks Rank of #2 (Buy) right now. Investors should feel comfortable knowing that AXTA likely has seen a stronger improvement to its earnings outlook than HWKN has recently. But this is only part of the picture for value investors.

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.

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.

AXTA currently has a forward P/E ratio of 12.42, while HWKN has a forward P/E of 25.28. We also note that AXTA has a PEG ratio of 0.81. 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. HWKN currently has a PEG ratio of 3.61.

Another notable valuation metric for AXTA is its P/B ratio of 3.52. 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, HWKN has a P/B of 4.93.

Based on these metrics and many more, AXTA holds a Value grade of B, while HWKN has a Value grade of D.

AXTA sticks out from HWKN in both our Zacks Rank and Style Scores models, so value investors will likely feel that AXTA is the better option right now.

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Axalta Coating Systems Ltd. (AXTA) : Free Stock Analysis Report

Hawkins, Inc. (HWKN) : Free Stock Analysis Report

This article originally published on Zacks Investment Research (zacks.com).

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