Investors interested in Consumer Products - Staples stocks are likely familiar with BJ's Wholesale Club (BJ) and Colgate-Palmolive (CL). But which of these two stocks presents investors with the better value opportunity right now? 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.
BJ's Wholesale Club has a Zacks Rank of #2 (Buy), while Colgate-Palmolive has a Zacks Rank of #3 (Hold) right now. This means that BJ'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 analyze a variety of traditional, tried-and-true metrics to help find companies 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.
BJ currently has a forward P/E ratio of 21.47, while CL has a forward P/E of 24.18. We also note that BJ has a PEG ratio of 2.60. 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 4.25.
Another notable valuation metric for BJ is its P/B ratio of 6.04. 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 207.94.
Based on these metrics and many more, BJ holds a Value grade of B, while CL has a Value grade of D.
BJ stands above CL thanks to its solid earnings outlook, and based on these valuation figures, we also feel that BJ is the superior value option right now.
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BJ's Wholesale Club Holdings, Inc. (BJ): 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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