Investors interested in Food - Miscellaneous stocks are likely familiar with US Foods (USFD) and Celsius Holdings Inc. (CELH). 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 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.
US Foods has a Zacks Rank of #2 (Buy), while Celsius Holdings Inc. has a Zacks Rank of #3 (Hold) right now. Investors should feel comfortable knowing that USFD likely has seen a stronger improvement to its earnings outlook than CELH has recently. But this is just one piece of the puzzle for value investors.
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.
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.
USFD currently has a forward P/E ratio of 16.34, while CELH has a forward P/E of 34.88. We also note that USFD has a PEG ratio of 0.81. 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. CELH currently has a PEG ratio of 0.85.
Another notable valuation metric for USFD is its P/B ratio of 3.79. 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, CELH has a P/B of 11.01.
Based on these metrics and many more, USFD holds a Value grade of A, while CELH has a Value grade of D.
USFD sticks out from CELH in both our Zacks Rank and Style Scores models, so value investors will likely feel that USFD is the better option right now.
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US Foods Holding Corp. (USFD): Free Stock Analysis Report Celsius Holdings Inc. (CELH): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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