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CPB vs. LW: Which Stock Is the Better Value Option?

Zacks Equity Research

Investors interested in Food - Miscellaneous stocks are likely familiar with Campbell Soup (CPB) and Lamb Weston (LW). But which of these two stocks presents investors with the better value opportunity right now? 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 proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.

Campbell Soup and Lamb Weston 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 CPB has an improving earnings outlook. But this is only part of the picture for value investors.

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.

CPB currently has a forward P/E ratio of 15.33, while LW has a forward P/E of 16.34. We also note that CPB has a PEG ratio of 2.52. 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. LW currently has a PEG ratio of 4.81.

Another notable valuation metric for CPB is its P/B ratio of 5. 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, LW has a P/B of 40.92.

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

CPB sticks out from LW in both our Zacks Rank and Style Scores models, so value investors will likely feel that CPB is the better option right now.

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Campbell Soup Company (CPB) : Free Stock Analysis Report
Lamb Weston Holdings Inc. (LW) : Free Stock Analysis Report
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