Investors with an interest in Food - Miscellaneous stocks have likely encountered both Campbell Soup (CPB) and Lamb Weston (LW). But which of these two companies is the best option for those looking for undervalued stocks? Let's take a closer look.
The best way to find great value stocks is to pair a strong Zacks Rank with an impressive 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. Investors should feel comfortable knowing that CPB likely has seen a stronger improvement to its earnings outlook than LW has recently. However, value investors will care about much more than just this.
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.
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.
CPB currently has a forward P/E ratio of 17.25, while LW has a forward P/E of 33.41. We also note that CPB has a PEG ratio of 2.08. 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. LW currently has a PEG ratio of 9.83.
Another notable valuation metric for CPB is its P/B ratio of 5.84. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. For comparison, LW has a P/B of 40.28.
Based on these metrics and many more, CPB holds a Value grade of A, while LW has a Value grade of C.
CPB is currently sporting an improving earnings outlook, which makes it stick out in our Zacks Rank model. And, based on the above valuation metrics, we feel that CPB is likely the superior value 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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