Investors interested in stocks from the Consumer Products - Staples sector have probably already heard of Ahold NV (ADRNY) and Church & Dwight (CHD). 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 Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.
Ahold NV and Church & Dwight are sporting Zacks Ranks of #1 (Strong Buy) and #3 (Hold), respectively, right now. This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that ADRNY is likely seeing its earnings outlook improve to a greater extent. But this is only part of the picture for value investors.
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 grades stocks based on a number of key metrics, including the tried-and-true P/E ratio, the P/S ratio, earnings yield, and cash flow per share, as well as a variety of other fundamentals that value investors frequently use.
ADRNY currently has a forward P/E ratio of 15.30, while CHD has a forward P/E of 26.74. We also note that ADRNY has a PEG ratio of 2.73. This popular figure is similar to the widely-used P/E ratio, but the PEG ratio also considers a company's expected EPS growth rate. CHD currently has a PEG ratio of 3.72.
Another notable valuation metric for ADRNY is its P/B ratio of 2.6. 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, CHD has a P/B of 6.09.
These metrics, and several others, help ADRNY earn a Value grade of A, while CHD has been given a Value grade of D.
ADRNY is currently sporting an improving earnings outlook, which makes it stick out in our Zacks Rank model. And, based on the above valuation metrics, we feel that ADRNY is likely the superior value option right now.
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Ahold NV (ADRNY): 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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