Investors looking for stocks in the Consumer Products - Staples sector might want to consider either Grocery Outlet Holding Corp. (GO) or Kimberly-Clark (KMB). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.
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 Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.
Grocery Outlet Holding Corp. 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 GO 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 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 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.
GO currently has a forward P/E ratio of 17.91, while KMB has a forward P/E of 18.58. We also note that GO has a PEG ratio of 3.35. 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 4.47.
Another notable valuation metric for GO is its P/B ratio of 1.1. 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. For comparison, KMB has a P/B of 35.69.
These are just a few of the metrics contributing to GO's Value grade of A and KMB's Value grade of C.
GO stands above KMB thanks to its solid earnings outlook, and based on these valuation figures, we also feel that GO is the superior value option right now.
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Grocery Outlet Holding Corp. (GO): 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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