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ADRNY vs. WDFC: Which Stock Is the Better Value Option?

Zacks Equity Research
T-Mobile (TMUS) closed the most recent trading day at $74.90, moving +0.6% from the previous trading session.

Investors with an interest in Consumer Products - Staples stocks have likely encountered both Ahold NV (ADRNY) and WD-40 (WDFC). But which of these two companies is the best option for those looking for undervalued stocks? 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 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.

Right now, Ahold NV is sporting a Zacks Rank of #2 (Buy), while WD-40 has a Zacks Rank of #3 (Hold). This means that ADRNY's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. But this is just one factor that value investors are interested in.

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 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.

ADRNY currently has a forward P/E ratio of 13, while WDFC has a forward P/E of 36.52. We also note that ADRNY has a PEG ratio of 1.84. 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. WDFC currently has a PEG ratio of 3.65.

Another notable valuation metric for ADRNY is its P/B ratio of 1.82. 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, WDFC has a P/B of 14.72.

These metrics, and several others, help ADRNY earn a Value grade of A, while WDFC has been given a Value grade of D.

ADRNY stands above WDFC thanks to its solid earnings outlook, and based on these valuation figures, we also feel that ADRNY is the superior value option right now.


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