Investors interested in stocks from the Consumer Products - Staples sector have probably already heard of Grocery Outlet Holding Corp. (GO) and Colgate-Palmolive (CL). But which of these two stocks offers value investors a better bang for their buck right now? We'll need to 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 proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.
Grocery Outlet Holding Corp. and Colgate-Palmolive are sporting Zacks Ranks of #2 (Buy) and #4 (Sell), respectively, right now. This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that GO is likely seeing its earnings outlook improve to a greater extent. But this is just one piece of the puzzle for value investors.
Value investors also try to analyze a wide range of traditional figures and metrics to help determine whether a company is undervalued at its current share price levels.
Our Value category highlights undervalued companies by looking at a variety of key metrics, including the popular P/E ratio, as well as the P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that have been used by value investors for years.
GO currently has a forward P/E ratio of 19.75, while CL has a forward P/E of 21.36. We also note that GO has a PEG ratio of 2.72. 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. CL currently has a PEG ratio of 4.60.
Another notable valuation metric for GO is its P/B ratio of 1.28. 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, CL has a P/B of 60.23.
Based on these metrics and many more, GO holds a Value grade of B, while CL has a Value grade of D.
GO has seen stronger estimate revision activity and sports more attractive valuation metrics than CL, so it seems like value investors will conclude that GO is the superior option right now.
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Grocery Outlet Holding Corp. (GO): Free Stock Analysis Report Colgate-Palmolive Company (CL): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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