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NWL vs. WDFC: Which Stock Should Value Investors Buy Now?

Zacks Equity Research

Investors interested in Consumer Products - Staples stocks are likely familiar with Newell Brands (NWL) and WD-40 (WDFC). 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 emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.

Currently, Newell Brands has a Zacks Rank of #1 (Strong Buy), while WD-40 has a Zacks Rank of #2 (Buy). Investors should feel comfortable knowing that NWL likely has seen a stronger improvement to its earnings outlook than WDFC has recently. But this is just one factor that value investors are interested in.

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.

The Style Score Value grade factors in a variety of key fundamental metrics, including the popular P/E ratio, P/S ratio, earnings yield, cash flow per share, and a number of other key stats that are commonly used by value investors.

NWL currently has a forward P/E ratio of 12.46, while WDFC has a forward P/E of 38.78. We also note that NWL has a PEG ratio of 2.56. 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. WDFC currently has a PEG ratio of 3.88.

Another notable valuation metric for NWL is its P/B ratio of 1.63. 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, WDFC has a P/B of 16.09.

These metrics, and several others, help NWL earn a Value grade of B, while WDFC has been given a Value grade of F.

NWL 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 NWL is likely the superior value option right now.


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