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ASBFY or NSRGY: Which Is the Better Value Stock Right Now?

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Investors interested in stocks from the Food - Miscellaneous sector have probably already heard of Associated British Foods PLC (ASBFY) and Nestle SA (NSRGY). But which of these two stocks presents investors with the better value opportunity right now? Let's take a closer look.

There are plenty of strategies for discovering value stocks, but we have found that pairing a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system produces the best returns. The proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.

Associated British Foods PLC has a Zacks Rank of #2 (Buy), while Nestle SA has a Zacks Rank of #3 (Hold) right now. This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that ASBFY is likely seeing its earnings outlook improve to a greater extent. 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 Value category of the Style Scores system identifies undervalued companies by looking at a number of key metrics. These include the long-favored P/E ratio, P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that help us determine a company's fair value.

ASBFY currently has a forward P/E ratio of 24.50, while NSRGY has a forward P/E of 26.22. We also note that ASBFY has a PEG ratio of 1.72. This popular figure is similar to the widely-used P/E ratio, but the PEG ratio also considers a company's expected EPS growth rate. NSRGY currently has a PEG ratio of 3.37.

Another notable valuation metric for ASBFY is its P/B ratio of 1.65. 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, NSRGY has a P/B of 7.41.

These are just a few of the metrics contributing to ASBFY's Value grade of B and NSRGY's Value grade of C.

ASBFY has seen stronger estimate revision activity and sports more attractive valuation metrics than NSRGY, so it seems like value investors will conclude that ASBFY is the superior option right now.


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Associated British Foods PLC (ASBFY) : Free Stock Analysis Report
 
Nestle SA (NSRGY) : Free Stock Analysis Report
 
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