Investors interested in Consumer Products - Discretionary stocks are likely familiar with PCM (PCMI) and SodaStream (SODA). But which of these two companies is the best option for those looking for undervalued stocks? Let's 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 proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
Right now, both PCM and SodaStream are sporting a Zacks Rank of # 2 (Buy). The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that both of these companies have improving earnings outlooks. But this is just one piece of the puzzle for value investors.
Value investors also try to analyze a wide range of traditional figures and metrics to help determine whether a company is undervalued at its 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.
PCMI currently has a forward P/E ratio of 8.58, while SODA has a forward P/E of 24.53. We also note that PCMI has a PEG ratio of 0.43. 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. SODA currently has a PEG ratio of 3.27.
Another notable valuation metric for PCMI is its P/B ratio of 1.50. 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, SODA has a P/B of 3.73.
Based on these metrics and many more, PCMI holds a Value grade of A, while SODA has a Value grade of C.
Both PCMI and SODA are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that PCMI is the superior value option right now.
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PCM, Inc. (PCMI) : Free Stock Analysis Report
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