Should Value Investors Buy Associated British Foods (ASBFY) Stock?

Here at Zacks, we focus on our proven ranking system, which places an emphasis on earnings estimates and estimate revisions, to find winning stocks. But we also understand that investors develop their own strategies, so we are constantly looking at the latest trends in value, growth, and momentum to find strong companies for our readers.

Of these, perhaps no stock market trend is more popular than value investing, which is a strategy that has proven to be successful in all sorts of market environments. Value investors use fundamental analysis and traditional valuation metrics to find stocks that they believe are being undervalued by the market at large.

In addition to the Zacks Rank, investors looking for stocks with specific traits can utilize our Style Scores system. Of course, value investors will be most interested in the system's "Value" category. Stocks with "A" grades for Value and high Zacks Ranks are among the best value stocks available at any given moment.

One company to watch right now is Associated British Foods (ASBFY). ASBFY is currently sporting a Zacks Rank #2 (Buy), as well as a Value grade of A. The stock is trading with a P/E ratio of 10.43, which compares to its industry's average of 15.99. Over the last 12 months, ASBFY's Forward P/E has been as high as 12.63 and as low as 9.40, with a median of 11.26.

Another valuation metric that we should highlight is ASBFY's P/B ratio of 1.4. 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. ASBFY's current P/B looks attractive when compared to its industry's average P/B of 1.74. ASBFY's P/B has been as high as 1.65 and as low as 1.18, with a median of 1.46, over the past year.

If you're looking for another solid Food - Miscellaneous value stock, take a look at Conagra Brands (CAG). CAG is a Zacks Rank of #2 (Buy) stock with a Value score of A.

Conagra Brands is trading at a forward earnings multiple of 10.36 at the moment, with a PEG ratio of 1.73. This compares to its industry's average P/E of 15.99 and average PEG ratio of 1.75.

Over the past year, CAG's P/E has been as high as 12.39, as low as 8.73, with a median of 10.45; its PEG ratio has been as high as 3.08, as low as 1.45, with a median of 1.75 during the same time period.

Additionally, Conagra Brands has a P/B ratio of 0.99 while its industry's price-to-book ratio sits at 1.74. For CAG, this valuation metric has been as high as 1.80, as low as 0.98, with a median of 1.38 over the past year.

Value investors will likely look at more than just these metrics, but the above data helps show that Associated British Foods and Conagra Brands are likely undervalued currently. And when considering the strength of its earnings outlook, ASBFY and CAG sticks out as one of the market's strongest value stocks.

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This article originally published on Zacks Investment Research (zacks.com).

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