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BTI vs. JAPAY: Which Stock Is the Better Value Option?

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Investors interested in Tobacco stocks are likely familiar with British American Tobacco (BTI - Free Report) and JAPAN TOB INC (JAPAY - Free Report) . But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.

The best way to find great value stocks is to pair a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system. 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.

British American Tobacco has a Zacks Rank of #2 (Buy), while JAPAN TOB INC has a Zacks Rank of #4 (Sell) right now. Investors should feel comfortable knowing that BTI likely has seen a stronger improvement to its earnings outlook than JAPAY has recently. But this is just one factor that value investors are interested in.

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.

BTI currently has a forward P/E ratio of 10.03, while JAPAY has a forward P/E of 13.23. We also note that BTI has a PEG ratio of 1.42. This popular figure is similar to the widely-used P/E ratio, but the PEG ratio also considers a company's expected EPS growth rate. JAPAY currently has a PEG ratio of 3.31.

Another notable valuation metric for BTI is its P/B ratio of 1. 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, JAPAY has a P/B of 2.02.

These metrics, and several others, help BTI earn a Value grade of A, while JAPAY has been given a Value grade of D.

BTI sticks out from JAPAY in both our Zacks Rank and Style Scores models, so value investors will likely feel that BTI is the better option right now.


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