Investors looking for stocks in the Consumer Products - Staples sector might want to consider either Grocery Outlet Holding Corp. (GO) or Church & Dwight (CHD). But which of these two companies is the best option for those looking for undervalued stocks? Let's take a closer look.
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 puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
Currently, Grocery Outlet Holding Corp. has a Zacks Rank of #2 (Buy), while Church & Dwight has a Zacks Rank of #3 (Hold). This means that GO's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. However, value investors will care about much more than just this.
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 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.
GO currently has a forward P/E ratio of 24.12, while CHD has a forward P/E of 26.19. We also note that GO has a PEG ratio of 3.33. 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. CHD currently has a PEG ratio of 3.75.
Another notable valuation metric for GO is its P/B ratio of 1.53. 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, CHD has a P/B of 5.04.
These metrics, and several others, help GO earn a Value grade of B, while CHD has been given a Value grade of D.
GO sticks out from CHD in both our Zacks Rank and Style Scores models, so value investors will likely feel that GO is the better option right now.
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Grocery Outlet Holding Corp. (GO): Free Stock Analysis Report Church & Dwight Co., Inc. (CHD): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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