Investors interested in Food - Miscellaneous stocks are likely familiar with Ingredion (INGR) and Danone (DANOY). But which of these two companies is the best option for those looking for undervalued stocks? Let's take a closer look.
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 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.
Ingredion and Danone are both sporting a Zacks Rank of #2 (Buy) right now. This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that these stocks have improving earnings outlooks. 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.
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.
INGR currently has a forward P/E ratio of 11.12, while DANOY has a forward P/E of 19.45. We also note that INGR has a PEG ratio of 1.01. This figure is similar to the commonly-used P/E ratio, with the PEG ratio also factoring in a company's expected earnings growth rate. DANOY currently has a PEG ratio of 4.87.
Another notable valuation metric for INGR is its P/B ratio of 1.92. The P/B is a method of comparing a stock's market value to its book value, which is defined as total assets minus total liabilities. By comparison, DANOY has a P/B of 2.95.
These are just a few of the metrics contributing to INGR's Value grade of A and DANOY's Value grade of C.
Both INGR and DANOY are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that INGR is the superior value option right now.
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Ingredion Incorporated (INGR): Free Stock Analysis Report Danone (DANOY): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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