Investors interested in stocks from the Consumer Products - Staples sector have probably already heard of Albertsons Companies, Inc. (ACI) and Kimberly-Clark (KMB). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.
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 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.
Currently, Albertsons Companies, Inc. has a Zacks Rank of #2 (Buy), while Kimberly-Clark has a Zacks Rank of #3 (Hold). The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that ACI has an improving earnings outlook. But this is just one piece of the puzzle for value investors.
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.
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 6.95, while KMB has a forward P/E of 23.81. We also note that ACI has a PEG ratio of 1.29. 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. KMB currently has a PEG ratio of 5.16.
Another notable valuation metric for ACI is its P/B ratio of 2.54. 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, KMB has a P/B of 77.08.
Based on these metrics and many more, ACI holds a Value grade of A, while KMB has a Value grade of C.
ACI stands above KMB thanks to its solid earnings outlook, and based on these valuation figures, we also feel that ACI is the superior value option right now.
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