Investors interested in Food - Miscellaneous stocks are likely familiar with United Natural Foods (UNFI) and McCormick (MKC). 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 proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.
United Natural Foods and McCormick are sporting Zacks Ranks of #2 (Buy) and #3 (Hold), respectively, right now. This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that UNFI is likely seeing its earnings outlook improve to a greater extent. However, value investors will care about much more than just this.
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.
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.
UNFI currently has a forward P/E ratio of 13.71, while MKC has a forward P/E of 23.87. We also note that UNFI has a PEG ratio of 1.67. 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. MKC currently has a PEG ratio of 2.65.
Another notable valuation metric for UNFI is its P/B ratio of 1.22. 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, MKC has a P/B of 5.11.
These metrics, and several others, help UNFI earn a Value grade of A, while MKC has been given a Value grade of C.
UNFI stands above MKC thanks to its solid earnings outlook, and based on these valuation figures, we also feel that UNFI is the superior value option right now.
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United Natural Foods, Inc. (UNFI) : Free Stock Analysis Report
McCormick & Company, Incorporated (MKC) : Free Stock Analysis Report
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