Investors interested in Food - Miscellaneous stocks are likely familiar with Smucker (SJM) and Kellogg (K). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.
We have found that the best way to discover great value opportunities is to pair a strong Zacks Rank with a great 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.
Currently, Smucker has a Zacks Rank of #2 (Buy), while Kellogg has a Zacks Rank of #3 (Hold). This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that SJM is likely seeing its earnings outlook improve to a greater extent. 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 Value category of the Style Scores system identifies undervalued companies by looking at a number of key metrics. These include the long-favored P/E ratio, P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that help us determine a company's fair value.
SJM currently has a forward P/E ratio of 13.22, while K has a forward P/E of 15.07. We also note that SJM has a PEG ratio of 3.28. 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. K currently has a PEG ratio of 3.35.
Another notable valuation metric for SJM is its P/B ratio of 1.61. The P/B ratio is used to compare a stock's market value with its book value, which is defined as total assets minus total liabilities. For comparison, K has a P/B of 6.40.
These metrics, and several others, help SJM earn a Value grade of B, while K has been given a Value grade of C.
SJM sticks out from K in both our Zacks Rank and Style Scores models, so value investors will likely feel that SJM is the better option right now.
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The J. M. Smucker Company (SJM) : Free Stock Analysis Report
Kellogg Company (K) : Free Stock Analysis Report
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