GPK vs. AMCR: Which Stock Should Value Investors Buy Now?
Investors interested in Containers - Paper and Packaging stocks are likely familiar with Graphic Packaging (GPK) and Bemis (AMCR). 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.
Everyone has their own methods for finding great value opportunities, but our model includes pairing an impressive grade in the Value category of our Style Scores system with a strong Zacks Rank. The Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.
Graphic Packaging has a Zacks Rank of #2 (Buy), while Bemis has a Zacks Rank of #3 (Hold) right now. This means that GPK'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 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.
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.
GPK currently has a forward P/E ratio of 13.17, while AMCR has a forward P/E of 15.84. We also note that GPK has a PEG ratio of 0.53. This figure is similar to the commonly-used P/E ratio, with the PEG ratio also factoring in a company's expected earnings growth rate. AMCR currently has a PEG ratio of 2.18.
Another notable valuation metric for GPK is its P/B ratio of 1.92. The P/B is a method of comparing a stock's market value to its book value, which is defined as total assets minus total liabilities. By comparison, AMCR has a P/B of 3.77.
These metrics, and several others, help GPK earn a Value grade of A, while AMCR has been given a Value grade of C.
GPK stands above AMCR thanks to its solid earnings outlook, and based on these valuation figures, we also feel that GPK is the superior value option right now.
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