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PPC or HRL: Which Is the Better Value Stock Right Now?

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Zacks Equity Research
·2 min read
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Investors interested in Food - Meat Products stocks are likely familiar with Pilgrim's Pride (PPC) and Hormel Foods (HRL). 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.

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 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.

Pilgrim's Pride has a Zacks Rank of #2 (Buy), while Hormel Foods has a Zacks Rank of #3 (Hold) right now. Investors should feel comfortable knowing that PPC likely has seen a stronger improvement to its earnings outlook than HRL has recently. But this is only part of the picture for value investors.

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.

PPC currently has a forward P/E ratio of 12.46, while HRL has a forward P/E of 27.01. We also note that PPC has a PEG ratio of 0.52. 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. HRL currently has a PEG ratio of 4.43.

Another notable valuation metric for PPC is its P/B ratio of 2.31. The P/B is a method of comparing a stock's market value to its book value, which is defined as total assets minus total liabilities. By comparison, HRL has a P/B of 3.87.

Based on these metrics and many more, PPC holds a Value grade of A, while HRL has a Value grade of C.

PPC stands above HRL thanks to its solid earnings outlook, and based on these valuation figures, we also feel that PPC is the superior value option right now.


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