Investors interested in stocks from the Paper and Related Products sector have probably already heard of International Paper (IP) and SMURFIT KAPPA (SMFKY). 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.
We have found that the best way to discover great value opportunities is to pair a strong Zacks Rank with a great 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.
International Paper and SMURFIT KAPPA are both sporting a Zacks Rank of # 2 (Buy) right now. This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that these stocks have improving earnings outlooks. 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.
IP currently has a forward P/E ratio of 10.05, while SMFKY has a forward P/E of 13. We also note that IP has a PEG ratio of 1.06. 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. SMFKY currently has a PEG ratio of 2.60.
Another notable valuation metric for IP is its P/B ratio of 3.12. 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, SMFKY has a P/B of 3.24.
These are just a few of the metrics contributing to IP's Value grade of A and SMFKY's Value grade of C.
Both IP and SMFKY are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that IP is the superior value option right now.
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International Paper Company (IP) : Free Stock Analysis Report
SMURFIT KAPPA (SMFKY) : Free Stock Analysis Report
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