Investors looking for stocks in the Consumer Products - Staples sector might want to consider either Grocery Outlet Holding Corp. (GO) or 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.
The best way to find great value stocks is to pair a strong Zacks Rank with an impressive 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.
Grocery Outlet Holding Corp. and Colgate-Palmolive are sporting Zacks Ranks of #2 (Buy) and #4 (Sell), respectively, right now. The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that GO has an improving earnings outlook. But this is just one piece of the puzzle for value investors.
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.
GO currently has a forward P/E ratio of 16.61, while CL has a forward P/E of 20.98. We also note that GO has a PEG ratio of 2.29. 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. CL currently has a PEG ratio of 4.60.
Another notable valuation metric for GO is its P/B ratio of 1.07. 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, CL has a P/B of 50.08.
These metrics, and several others, help GO earn a Value grade of A, while CL has been given a Value grade of D.
GO sticks out from CL in both our Zacks Rank and Style Scores models, so value investors will likely feel that GO is the better option right now.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
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).
Zacks Investment Research
