ADRNY vs. CLX: Which Stock Is the Better Value Option?

Investors with an interest in Consumer Products - Staples stocks have likely encountered both Ahold NV (ADRNY) and Clorox (CLX). But which of these two companies is the best option for those looking for undervalued stocks? Let's take a closer look.

There are plenty of strategies for discovering value stocks, but we have found that pairing a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system produces the best returns. 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.

Ahold NV and Clorox are sporting Zacks Ranks of #2 (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 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.

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.

ADRNY currently has a forward P/E ratio of 14.16, while CLX has a forward P/E of 19.91. We also note that ADRNY has a PEG ratio of 2.65. 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. CLX currently has a PEG ratio of 2.66.

Another notable valuation metric for ADRNY is its P/B ratio of 2.24. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. For comparison, CLX has a P/B of 144.88.

These metrics, and several others, help ADRNY earn a Value grade of A, while CLX has been given a Value grade of D.

ADRNY stands above CLX thanks to its solid earnings outlook, and based on these valuation figures, we also feel that ADRNY is the superior value option right now.

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

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