Investors interested in Consumer Products - Staples stocks are likely familiar with Albertsons Companies, Inc. (ACI) and Chewy (CHWY). But which of these two stocks presents investors with the better value opportunity right now? Let's take a closer look.
We have found that the best way to discover great value opportunities is to pair a strong Zacks Rank with a great grade in the Value category of our Style Scores system. The proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
Right now, both Albertsons Companies, Inc. and Chewy are sporting a Zacks Rank of # 2 (Buy). Investors should feel comfortable knowing that both of these stocks have an improving earnings outlook since the Zacks Rank favors companies that have witnessed positive analyst estimate revisions. However, value investors will care about much more than just this.
Value investors also tend to look at a number of traditional, tried-and-true figures to help them find stocks that they believe are undervalued at their current share price levels.
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.
ACI currently has a forward P/E ratio of 10.30, while CHWY has a forward P/E of 806.83. We also note that ACI has a PEG ratio of 0.86. 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. CHWY currently has a PEG ratio of 40.34.
Another notable valuation metric for ACI is its P/B ratio of 7.26. 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, CHWY has a P/B of 497.71.
Based on these metrics and many more, ACI holds a Value grade of A, while CHWY has a Value grade of F.
Both ACI and CHWY are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that ACI is the superior value option right now.
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Albertsons Companies, Inc. (ACI) : Free Stock Analysis Report
Chewy Inc. (CHWY) : Free Stock Analysis Report
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