CHEF vs. MGPI: Which Stock Is the Better Value Option?
Investors interested in Food - Miscellaneous stocks are likely familiar with Chefs' Warehouse (CHEF) and MGP (MGPI). 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 puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
Chefs' Warehouse and MGP are sporting Zacks Ranks of #2 (Buy) and #3 (Hold), respectively, right now. This means that CHEF's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. 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.
CHEF currently has a forward P/E ratio of 38.63, while MGPI has a forward P/E of 44.61. We also note that CHEF has a PEG ratio of 1.76. 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. MGPI currently has a PEG ratio of 2.97.
Another notable valuation metric for CHEF is its P/B ratio of 3.24. The P/B ratio is used to compare a stock's market value with its book value, which is defined as total assets minus total liabilities. For comparison, MGPI has a P/B of 9.13.
These metrics, and several others, help CHEF earn a Value grade of B, while MGPI has been given a Value grade of F.
CHEF has seen stronger estimate revision activity and sports more attractive valuation metrics than MGPI, so it seems like value investors will conclude that CHEF is the superior option right now.
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The Chefs' Warehouse, Inc. (CHEF) : Free Stock Analysis Report
MGP Ingredients, Inc. (MGPI) : Free Stock Analysis Report
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