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GIS or MKC: Which Is the Better Value Stock Right Now?

Zacks Equity Research

Investors interested in Food - Miscellaneous stocks are likely familiar with General Mills (GIS) and McCormick (MKC). 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.

General Mills and McCormick 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 GIS has an improving earnings outlook. But this is only part of the picture 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 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.

GIS currently has a forward P/E ratio of 17.16, while MKC has a forward P/E of 33.17. We also note that GIS has a PEG ratio of 2.29. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. MKC currently has a PEG ratio of 6.74.

Another notable valuation metric for GIS is its P/B ratio of 4.68. 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, MKC has a P/B of 6.41.

These are just a few of the metrics contributing to GIS's Value grade of B and MKC's Value grade of F.

GIS 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 GIS is likely the superior value option right now.


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General Mills, Inc. (GIS) : Free Stock Analysis Report
 
McCormick Company, Incorporated (MKC) : Free Stock Analysis Report
 
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