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GIS vs. LW: Which Stock Should Value Investors Buy Now?

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·2 min read
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  • LW
  • GIS

Investors looking for stocks in the Food - Miscellaneous sector might want to consider either General Mills (GIS) or Lamb Weston (LW). 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.

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 puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.

Currently, General Mills has a Zacks Rank of #2 (Buy), while Lamb Weston has a Zacks Rank of #5 (Strong Sell). This means that GIS's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. But this is only part of the picture for value investors.

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.

GIS currently has a forward P/E ratio of 16.64, while LW has a forward P/E of 37.50. We also note that GIS has a PEG ratio of 2.22. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. LW currently has a PEG ratio of 3.63.

Another notable valuation metric for GIS is its P/B ratio of 3.83. The P/B ratio is used to compare a stock's market value with its book value, which is defined as total assets minus total liabilities. For comparison, LW has a P/B of 19.96.

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

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
 
Lamb Weston (LW) : Free Stock Analysis Report
 
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