Investors looking for stocks in the Food - Miscellaneous sector might want to consider either Smucker (SJM) or Lamb Weston (LW). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.
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, Smucker is sporting a Zacks Rank of #1 (Strong Buy), while Lamb Weston has a Zacks Rank of #5 (Strong Sell). 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 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.
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.
SJM currently has a forward P/E ratio of 13.63, while LW has a forward P/E of 23.49. We also note that SJM has a PEG ratio of 6.31. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. LW currently has a PEG ratio of 6.91.
Another notable valuation metric for SJM is its P/B ratio of 1.60. 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, LW has a P/B of 33.14.
These are just a few of the metrics contributing to SJM's Value grade of B and LW's Value grade of F.
SJM is currently sporting an improving earnings outlook, which makes it stick out in our Zacks Rank model. And, based on the above valuation metrics, we feel that SJM is likely the superior value option right now.
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The J. M. Smucker Company (SJM) : Free Stock Analysis Report
Lamb Weston Holdings Inc. (LW) : Free Stock Analysis Report
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