ADM vs. AVO: Which Stock Is the Better Value Option?
Investors interested in stocks from the Agriculture - Operations sector have probably already heard of Archer Daniels Midland (ADM) and Mission Produce, Inc. (AVO). 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 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.
Archer Daniels Midland and Mission Produce, Inc. are sporting Zacks Ranks of #2 (Buy) and #3 (Hold), respectively, right now. The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that ADM has an improving earnings outlook. But this is only part of the picture 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.
Our Value category highlights undervalued companies by looking at a variety of key metrics, including the popular P/E ratio, as well as the P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that have been used by value investors for years.
ADM currently has a forward P/E ratio of 12.80, while AVO has a forward P/E of 29.61. We also note that ADM has a PEG ratio of 1.84. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. AVO currently has a PEG ratio of 4.15.
Another notable valuation metric for ADM is its P/B ratio of 1.99. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. For comparison, AVO has a P/B of 2.15.
These metrics, and several others, help ADM earn a Value grade of A, while AVO has been given a Value grade of C.
ADM has seen stronger estimate revision activity and sports more attractive valuation metrics than AVO, so it seems like value investors will conclude that ADM is the superior option right now.
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Archer Daniels Midland Company (ADM) : Free Stock Analysis Report
Mission Produce, Inc. (AVO) : Free Stock Analysis Report
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