Back to top

Image: Bigstock

GEF vs. SON: Which Stock Should Value Investors Buy Now?

Read MoreHide Full Article

Investors interested in stocks from the Containers - Paper and Packaging sector have probably already heard of Greif (GEF - Free Report) and Sonoco (SON - 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.

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 proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.

Currently, both Greif and Sonoco are holding a Zacks Rank of # 1 (Strong Buy). Investors should feel comfortable knowing that both of these stocks have an improving earnings outlook since the Zacks Rank favors companies that have witnessed positive analyst estimate revisions. But this is just one piece of the puzzle for value investors.

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 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.

GEF currently has a forward P/E ratio of 8.93, while SON has a forward P/E of 9.67. We also note that GEF has a PEG ratio of 0.89. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. SON currently has a PEG ratio of 1.93.

Another notable valuation metric for GEF is its P/B ratio of 1.94. 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, SON has a P/B of 3.08.

Based on these metrics and many more, GEF holds a Value grade of A, while SON has a Value grade of C.

Both GEF and SON are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that GEF is the superior value option right now.


In-Depth Zacks Research for the Tickers Above


Normally $25 each - click below to receive one report FREE:


Sonoco Products Company (SON) - free report >>

Greif, Inc. (GEF) - free report >>

Published in