Investors looking for stocks in the Consumer Products - Staples sector might want to consider either Ahold NV (ADRNY) or 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.
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 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.
Both Ahold NV and Kimberly-Clark have a Zacks Rank of # 2 (Buy) right now. The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that both of these companies have improving earnings outlooks. But this is just one piece of the puzzle 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.
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.
ADRNY currently has a forward P/E ratio of 13.32, while KMB has a forward P/E of 18.82. We also note that ADRNY has a PEG ratio of 2.61. 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. KMB currently has a PEG ratio of 3.72.
Another notable valuation metric for ADRNY is its P/B ratio of 1.89. 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, KMB has a P/B of 1,060.14.
These are just a few of the metrics contributing to ADRNY's Value grade of A and KMB's Value grade of C.
Both ADRNY and KMB are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that ADRNY is the superior value option right now.
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