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USFD vs. POST: Which Stock Should Value Investors Buy Now?

Zacks Equity Research
·2 min read

Investors looking for stocks in the Food - Miscellaneous sector might want to consider either US Foods Holding Corp. (USFD) or Post Holdings (POST). 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.

US Foods Holding Corp. has a Zacks Rank of #1 (Strong Buy), while Post Holdings has a Zacks Rank of #3 (Hold) right now. Investors should feel comfortable knowing that USFD likely has seen a stronger improvement to its earnings outlook than POST has recently. But this is just one piece of the puzzle for value investors.

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.

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.

USFD currently has a forward P/E ratio of 12.40, while POST has a forward P/E of 21.91. We also note that USFD has a PEG ratio of 1.65. 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. POST currently has a PEG ratio of 3.13.

Another notable valuation metric for USFD is its P/B ratio of 1.99. 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, POST has a P/B of 2.14.

These metrics, and several others, help USFD earn a Value grade of B, while POST has been given a Value grade of C.

USFD sticks out from POST in both our Zacks Rank and Style Scores models, so value investors will likely feel that USFD is the better option right now.

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US Foods Holding Corp. (USFD) : Free Stock Analysis Report
Post Holdings, Inc. (POST) : Free Stock Analysis Report
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Zacks Investment Research