Investors looking for stocks in the Containers - Paper and Packaging sector might want to consider either Amcor (AMCR) or Avery Dennison (AVY). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.
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 Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.
Right now, Amcor is sporting a Zacks Rank of #2 (Buy), while Avery Dennison has a Zacks Rank of #4 (Sell). This means that AMCR's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. 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 Value category of the Style Scores system identifies undervalued companies by looking at a number of key metrics. These include the long-favored P/E ratio, P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that help us determine a company's fair value.
AMCR currently has a forward P/E ratio of 11.41, while AVY has a forward P/E of 18.95. We also note that AMCR has a PEG ratio of 2.29. 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. AVY currently has a PEG ratio of 2.90.
Another notable valuation metric for AMCR is its P/B ratio of 3.55. 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, AVY has a P/B of 6.52.
Based on these metrics and many more, AMCR holds a Value grade of B, while AVY has a Value grade of C.
AMCR sticks out from AVY in both our Zacks Rank and Style Scores models, so value investors will likely feel that AMCR is the better option right now.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Amcor PLC (AMCR): Free Stock Analysis Report Avery Dennison Corporation (AVY): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
Zacks Investment Research
