Investors looking for stocks in the Consumer Products - Discretionary sector might want to consider either Sendas Distribuidora S.A. Sponsored ADR (ASAIY) or Kellanova (K). 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.
Currently, Sendas Distribuidora S.A. Sponsored ADR has a Zacks Rank of #2 (Buy), while Kellanova has a Zacks Rank of #4 (Sell). This means that ASAIY's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. However, value investors will care about much more than just this.
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.
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.
ASAIY currently has a forward P/E ratio of 18.58, while K has a forward P/E of 21.26. We also note that ASAIY has a PEG ratio of 0.51. 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. K currently has a PEG ratio of 4.24.
Another notable valuation metric for ASAIY is its P/B ratio of 2.84. The P/B is a method of comparing a stock's market value to its book value, which is defined as total assets minus total liabilities. By comparison, K has a P/B of 6.9.
These are just a few of the metrics contributing to ASAIY's Value grade of A and K's Value grade of C.
ASAIY sticks out from K in both our Zacks Rank and Style Scores models, so value investors will likely feel that ASAIY is the better option right now.
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Sendas Distribuidora S.A. Sponsored ADR (ASAIY): Free Stock Analysis Report Kellanova (K): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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