Investors looking for stocks in the Food - Miscellaneous sector might want to consider either US Foods Holding Corp. (USFD) 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 proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.
US Foods Holding Corp. and Lamb Weston are sporting Zacks Ranks of #1 (Strong Buy) and #3 (Hold), respectively, right now. Investors should feel comfortable knowing that USFD likely has seen a stronger improvement to its earnings outlook than LW has recently. 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.
USFD currently has a forward P/E ratio of 16.50, while LW has a forward P/E of 22.90. We also note that USFD has a PEG ratio of 1.91. 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 2.98.
Another notable valuation metric for USFD is its P/B ratio of 2.41. 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 124.94.
These metrics, and several others, help USFD earn a Value grade of B, while LW has been given a Value grade of D.
USFD has seen stronger estimate revision activity and sports more attractive valuation metrics than LW, so it seems like value investors will conclude that USFD is the superior option right now.
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US Foods Holding Corp. (USFD) : Free Stock Analysis Report
Lamb Weston Holdings Inc. (LW) : Free Stock Analysis Report
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