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CPB vs. MKC: Which Stock Should Value Investors Buy Now?

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Investors with an interest in Food - Miscellaneous stocks have likely encountered both Campbell Soup (CPB - Free Report) and McCormick (MKC - Free Report) . But which of these two stocks offers value investors a better bang for their buck right now? We'll need to take a closer look.

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.

Currently, Campbell Soup has a Zacks Rank of #2 (Buy), while McCormick has a Zacks Rank of #3 (Hold). Investors should feel comfortable knowing that CPB likely has seen a stronger improvement to its earnings outlook than MKC has recently. But this is just one factor that value investors are interested in.

Value investors also try to analyze a wide range of traditional figures and metrics to help determine whether a company is undervalued at its 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.

CPB currently has a forward P/E ratio of 17.64, while MKC has a forward P/E of 34.40. We also note that CPB has a PEG ratio of 2.13. 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. MKC currently has a PEG ratio of 5.96.

Another notable valuation metric for CPB is its P/B ratio of 5.91. 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, MKC has a P/B of 7.21.

These metrics, and several others, help CPB earn a Value grade of B, while MKC has been given a Value grade of D.

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


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