U.S. markets open in 2 hours 13 minutes
  • S&P Futures

    3,347.00
    +1.00 (+0.03%)
     
  • Dow Futures

    27,491.00
    +9.00 (+0.03%)
     
  • Nasdaq Futures

    11,388.50
    -6.25 (-0.05%)
     
  • Russell 2000 Futures

    1,505.60
    -0.90 (-0.06%)
     
  • Crude Oil

    40.34
    -0.26 (-0.64%)
     
  • Gold

    1,892.30
    +10.00 (+0.53%)
     
  • Silver

    24.01
    +0.41 (+1.74%)
     
  • EUR/USD

    1.1712
    +0.0044 (+0.37%)
     
  • 10-Yr Bond

    0.6630
    0.0000 (0.00%)
     
  • Vix

    26.75
    +0.37 (+1.40%)
     
  • GBP/USD

    1.2857
    +0.0015 (+0.12%)
     
  • USD/JPY

    105.6410
    +0.1220 (+0.12%)
     
  • BTC-USD

    10,788.46
    +85.95 (+0.80%)
     
  • CMC Crypto 200

    222.18
    -1.75 (-0.78%)
     
  • FTSE 100

    5,903.39
    -24.54 (-0.41%)
     
  • Nikkei 225

    23,539.10
    +27.48 (+0.12%)
     

THS vs. LW: Which Stock Should Value Investors Buy Now?

Zacks Equity Research

Investors looking for stocks in the Food - Miscellaneous sector might want to consider either TreeHouse Foods (THS) 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.

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 favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.

TreeHouse Foods has a Zacks Rank of #2 (Buy), while Lamb Weston has a Zacks Rank of #4 (Sell) right now. The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that THS has an improving earnings outlook. But this is just one factor that value investors are interested in.

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 grades stocks based on a number of key metrics, including the tried-and-true P/E ratio, the P/S ratio, earnings yield, and cash flow per share, as well as a variety of other fundamentals that value investors frequently use.

THS currently has a forward P/E ratio of 16.04, while LW has a forward P/E of 29.98. We also note that THS has a PEG ratio of 2.08. 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. LW currently has a PEG ratio of 8.33.

Another notable valuation metric for THS is its P/B ratio of 1.34. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. For comparison, LW has a P/B of 37.99.

Based on these metrics and many more, THS holds a Value grade of B, while LW has a Value grade of D.

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


Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
 
TreeHouse Foods, Inc. (THS) : Free Stock Analysis Report
 
Lamb Weston Holdings Inc. (LW) : Free Stock Analysis Report
 
To read this article on Zacks.com click here.
 
Zacks Investment Research