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ACI vs. KMB: Which Stock Is the Better Value Option?

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Investors with an interest in Consumer Products - Staples stocks have likely encountered both Albertsons Companies, Inc. (ACI - Free Report) and Kimberly-Clark (KMB - Free Report) . But which of these two companies is the best option for those looking for undervalued stocks? Let's 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.

Right now, Albertsons Companies, Inc. is sporting a Zacks Rank of #2 (Buy), while Kimberly-Clark has a Zacks Rank of #5 (Strong Sell). This means that ACI'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 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 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.

ACI currently has a forward P/E ratio of 9.17, while KMB has a forward P/E of 17.47. We also note that ACI has a PEG ratio of 0.77. 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. KMB currently has a PEG ratio of 3.49.

Another notable valuation metric for ACI is its P/B ratio of 6.37. Investors use the P/B ratio to look at a stock's market value versus its book value, which is defined as total assets minus total liabilities. By comparison, KMB has a P/B of 58.55.

These are just a few of the metrics contributing to ACI's Value grade of A and KMB's Value grade of C.

ACI is currently sporting an improving earnings outlook, which makes it stick out in our Zacks Rank model. And, based on the above valuation metrics, we feel that ACI is likely the superior value option right now.


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