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ACI vs. KMB: Which Stock Should Value Investors Buy Now?

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Investors interested in stocks from the Consumer Products - Staples sector have probably already heard of Albertsons Companies, Inc. (ACI - Free Report) and Kimberly-Clark (KMB - Free Report) . But which of these two stocks presents investors with the better value opportunity right now? 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 proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.

Currently, Albertsons Companies, Inc. has a Zacks Rank of #1 (Strong Buy), while Kimberly-Clark has a Zacks Rank of #5 (Strong Sell). This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that ACI is likely seeing its earnings outlook improve to a greater extent. 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.

ACI currently has a forward P/E ratio of 14.75, while KMB has a forward P/E of 20.77. We also note that ACI has a PEG ratio of 1.23. 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. KMB currently has a PEG ratio of 4.15.

Another notable valuation metric for ACI is its P/B ratio of 9.20. 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, KMB has a P/B of 62.14.

These metrics, and several others, help ACI earn a Value grade of A, while KMB has been given a Value grade of C.

ACI has seen stronger estimate revision activity and sports more attractive valuation metrics than KMB, so it seems like value investors will conclude that ACI is the superior option right now.


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Kimberly-Clark Corporation (KMB) - free report >>

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