Investors looking for stocks in the Containers - Paper and Packaging sector might want to consider either Greif (GEF) or Packaging Corp. (PKG). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.
There are plenty of strategies for discovering value stocks, but we have found that pairing a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system produces the best returns. The Zacks Rank is a proven strategy that targets companies with positive earnings estimate revision trends, while our Style Scores work to grade companies based on specific traits.
Currently, Greif has a Zacks Rank of #2 (Buy), while Packaging Corp. has a Zacks Rank of #3 (Hold). Investors should feel comfortable knowing that GEF likely has seen a stronger improvement to its earnings outlook than PKG has recently. However, value investors will care about much more than just this.
Value investors analyze a variety of traditional, tried-and-true metrics to help find companies that they believe are undervalued at their 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.
GEF currently has a forward P/E ratio of 15.78, while PKG has a forward P/E of 18.98. We also note that GEF has a PEG ratio of 1.31. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. PKG currently has a PEG ratio of 2.27.
Another notable valuation metric for GEF is its P/B ratio of 1.39. The P/B ratio is used to compare a stock's market value with its book value, which is defined as total assets minus total liabilities. For comparison, PKG has a P/B of 3.87.
These metrics, and several others, help GEF earn a Value grade of A, while PKG has been given a Value grade of C.
GEF sticks out from PKG in both our Zacks Rank and Style Scores models, so value investors will likely feel that GEF is the better option right now.
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Greif, Inc. (GEF): Free Stock Analysis Report Packaging Corporation of America (PKG): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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