Investors interested in stocks from the Food - Meat Products sector have probably already heard of Pilgrim's Pride (PPC) and Hormel Foods (HRL). 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 Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.
Pilgrim's Pride has a Zacks Rank of #1 (Strong 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 also tend to look at a number of traditional, tried-and-true figures to help them find stocks 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.
PPC currently has a forward P/E ratio of 11.82, while HRL has a forward P/E of 26.70. We also note that PPC has a PEG ratio of 0.53. 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. HRL currently has a PEG ratio of 4.41.
Another notable valuation metric for PPC is its P/B ratio of 3.08. 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 4.24.
These metrics, and several others, help PPC earn a Value grade of A, while HRL has been given a Value grade of C.
PPC has seen stronger estimate revision activity and sports more attractive valuation metrics than HRL, so it seems like value investors will conclude that PPC is the superior option right now.
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Pilgrim's Pride Corporation (PPC) : Free Stock Analysis Report
Hormel Foods Corporation (HRL) : Free Stock Analysis Report
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