Investors looking for stocks in the Steel - Producers sector might want to consider either Posco (PKX) or United States Steel (X). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.

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 Zacks Rank is a proven strategy that targets companies with positive earnings estimate revision trends, while our Style Scores work to grade companies based on specific traits.

Posco has a Zacks Rank of #2 (Buy), while United States Steel has a Zacks Rank of #3 (Hold) right now. This means that PKX's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. But this is only part of the picture for value investors.

Value investors also try to analyze a wide range of traditional figures and metrics to help determine whether a company is undervalued at its 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.

PKX currently has a forward P/E ratio of 12.05, while X has a forward P/E of 26.61. We also note that PKX has a PEG ratio of 0.33. This figure is similar to the commonly-used P/E ratio, with the PEG ratio also factoring in a company's expected earnings growth rate. X currently has a PEG ratio of 1.31.

Another notable valuation metric for PKX is its P/B ratio of 0.33. The P/B is a method of comparing a stock's market value to its book value, which is defined as total assets minus total liabilities. By comparison, X has a P/B of 0.84.

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

PKX 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 PKX is likely the superior value option right now.

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POSCO (PKX):Free Stock Analysis Report

United States Steel Corporation (X):Free Stock Analysis Report

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

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