Investors interested in stocks from the Containers - Paper and Packaging sector have probably already heard of Graphic Packaging (GPK) and Bemis (BMS). 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 proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
Graphic Packaging has a Zacks Rank of #1 (Strong Buy), while Bemis has a Zacks Rank of #2 (Buy) 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. However, value investors will care about much more than just this.
Value investors are also interested in a number of tried-and-true valuation metrics that help show when 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.
GPK currently has a forward P/E ratio of 14.94, while BMS has a forward P/E of 18.59. We also note that GPK has a PEG ratio of 1.15. 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. BMS currently has a PEG ratio of 2.54.
Another notable valuation metric for GPK is its P/B ratio of 1.94. 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, BMS has a P/B of 4.16.
These are just a few of the metrics contributing to GPK's Value grade of A and BMS's Value grade of C.
GPK has seen stronger estimate revision activity and sports more attractive valuation metrics than BMS, so it seems like value investors will conclude that GPK is the superior option right now.
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Graphic Packaging Holding Company (GPK) : Free Stock Analysis Report
Bemis Company, Inc. (BMS) : Free Stock Analysis Report
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