PKG vs. ATR: Which Stock Is the Better Value Option?
Investors interested in stocks from the Containers - Paper and Packaging sector have probably already heard of Packaging Corp. (PKG) and AptarGroup (ATR). But which of these two stocks presents investors with the better value opportunity right now? Let's take a closer look.
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 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.
Packaging Corp. and AptarGroup are sporting Zacks Ranks of #1 (Strong Buy) and #2 (Buy), respectively, right now. This means that PKG'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 highlights undervalued companies by looking at a variety of key metrics, including the popular P/E ratio, as well as the P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that have been used by value investors for years.
PKG currently has a forward P/E ratio of 18.72, while ATR has a forward P/E of 27.88. We also note that PKG has a PEG ratio of 3.74. 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. ATR currently has a PEG ratio of 3.98.
Another notable valuation metric for PKG is its P/B ratio of 3.57. 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, ATR has a P/B of 3.82.
These are just a few of the metrics contributing to PKG's Value grade of B and ATR's Value grade of C.
PKG has seen stronger estimate revision activity and sports more attractive valuation metrics than ATR, so it seems like value investors will conclude that PKG is the superior option right now.
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Packaging Corporation of America (PKG) : Free Stock Analysis Report
AptarGroup, Inc. (ATR) : Free Stock Analysis Report
