Investors interested in Consumer Products - Staples stocks are likely familiar with Ahold NV (ADRNY) and Kimberly-Clark (KMB). But which of these two stocks presents investors with the better value opportunity right now? Let's 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 proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.
Ahold NV and Kimberly-Clark are sporting Zacks Ranks of #2 (Buy) and #4 (Sell), 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 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 14.08, while KMB has a forward P/E of 19.60. We also note that ADRNY has a PEG ratio of 1.64. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. KMB currently has a PEG ratio of 4.93.
Another notable valuation metric for ADRNY is its P/B ratio of 2.26. 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, KMB has a P/B of 37.70.
These metrics, and several others, help ADRNY earn a Value grade of A, while KMB has been given a Value grade of D.
ADRNY sticks out from KMB in both our Zacks Rank and Style Scores models, so value investors will likely feel that ADRNY is the better option right now.
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Ahold NV (ADRNY): Free Stock Analysis Report Kimberly-Clark Corporation (KMB): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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