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LNDC or USFD: Which Is the Better Value Stock Right Now?

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·2 min read
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Investors interested in Food - Miscellaneous stocks are likely familiar with Landec (LNDC) and US Foods Holding Corp. (USFD). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.

There are plenty of strategies for discovering value stocks, but we have found that pairing a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system produces the best returns. 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, Landec has a Zacks Rank of #2 (Buy), while US Foods Holding Corp. has a Zacks Rank of #3 (Hold). Investors should feel comfortable knowing that LNDC likely has seen a stronger improvement to its earnings outlook than USFD has recently. However, value investors will care about much more than just this.

Value investors analyze a variety of traditional, tried-and-true metrics to help find companies 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.

LNDC currently has a forward P/E ratio of 28.05, while USFD has a forward P/E of 65.63. We also note that LNDC has a PEG ratio of 2.81. This popular figure is similar to the widely-used P/E ratio, but the PEG ratio also considers a company's expected EPS growth rate. USFD currently has a PEG ratio of 6.56.

Another notable valuation metric for LNDC is its P/B ratio of 1.29. 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, USFD has a P/B of 1.31.

These are just a few of the metrics contributing to LNDC's Value grade of A and USFD's Value grade of C.

LNDC sticks out from USFD in both our Zacks Rank and Style Scores models, so value investors will likely feel that LNDC is the better option right now.

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Landec Corporation (LNDC) : Free Stock Analysis Report
US Foods Holding Corp. (USFD) : Free Stock Analysis Report
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Zacks Investment Research