Investors with an interest in Agriculture - Operations stocks have likely encountered both Corteva, Inc. (CTVA) and Limoneira (LMNR). 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 Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.
Corteva, Inc. has a Zacks Rank of #2 (Buy), while Limoneira has a Zacks Rank of #3 (Hold) right now. The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that CTVA has an improving earnings outlook. But this is just one piece of the puzzle for value investors.
Value investors analyze a variety of traditional, tried-and-true metrics to help find companies 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.
CTVA currently has a forward P/E ratio of 24.90, while LMNR has a forward P/E of 244.57. We also note that CTVA has a PEG ratio of 1.76. 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. LMNR currently has a PEG ratio of 16.30.
Another notable valuation metric for CTVA is its P/B ratio of 1.43. Investors use the P/B ratio to look at a stock's market value versus its book value, which is defined as total assets minus total liabilities. By comparison, LMNR has a P/B of 1.49.
These are just a few of the metrics contributing to CTVA's Value grade of B and LMNR's Value grade of D.
CTVA 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 CTVA is likely the superior value option right now.
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