Investors looking for stocks in the Food - Miscellaneous sector might want to consider either General Mills (GIS) or McCormick (MKC). But which of these two stocks presents investors with the better value opportunity right now? 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 is a proven strategy that targets companies with positive earnings estimate revision trends, while our Style Scores work to grade companies based on specific traits.
Right now, both General Mills and McCormick are sporting a Zacks Rank of # 2 (Buy). Investors should feel comfortable knowing that both of these stocks have an improving earnings outlook since the Zacks Rank favors companies that have witnessed positive analyst estimate revisions. But this is just one piece of the puzzle for value investors.
Value investors also tend to look at a number of traditional, tried-and-true figures to help them find stocks that they believe are undervalued at their 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.
GIS currently has a forward P/E ratio of 17.87, while MKC has a forward P/E of 31.78. We also note that GIS has a PEG ratio of 2.38. 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 5.50.
Another notable valuation metric for GIS is its P/B ratio of 4.60. 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, MKC has a P/B of 6.66.
These are just a few of the metrics contributing to GIS's Value grade of B and MKC's Value grade of C.
Both GIS and MKC are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that GIS is 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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