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GEF vs. SON: Which Stock Is the Better Value Option?

Zacks Equity Research
Steel Dynamics (STLD) reported earnings 30 days ago. What's next for the stock? We take a look at earnings estimates for some clues.

Investors interested in stocks from the Containers - Paper and Packaging sector have probably already heard of Greif (GEF) and Sonoco (SON). But which of these two stocks offers value investors a better bang for their buck right now? We'll need to 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 puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.

Currently, Greif has a Zacks Rank of #2 (Buy), while Sonoco has a Zacks Rank of #4 (Sell). This means that GEF'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 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 grades stocks based on a number of key metrics, including the tried-and-true P/E ratio, the P/S ratio, earnings yield, and cash flow per share, as well as a variety of other fundamentals that value investors frequently use.

GEF currently has a forward P/E ratio of 13.16, while SON has a forward P/E of 15.72. We also note that GEF has a PEG ratio of 1.52. 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. SON currently has a PEG ratio of 3.37.

Another notable valuation metric for GEF is its P/B ratio of 1.96. 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, SON has a P/B of 2.89.

These metrics, and several others, help GEF earn a Value grade of B, while SON has been given a Value grade of C.

GEF 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 GEF is likely the superior value option right now.


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Greif, Inc. (GEF) : Free Stock Analysis Report
 
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