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KR vs. WMMVY: Which Stock Is the Better Value Option?
Investors interested in stocks from the Retail - Supermarkets sector have probably already heard of Kroger (KR - Free Report) and WalMart de Mexico SAB de CV (WMMVY - Free Report) . But which of these two companies is the best option for those looking for undervalued stocks? Let's take a closer look.
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 proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.
Kroger and WalMart de Mexico SAB de CV are sporting Zacks Ranks of #2 (Buy) and #3 (Hold), respectively, right now. The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that KR has an improving earnings outlook. However, value investors will care about much more than just this.
Value investors are also interested in a number of tried-and-true valuation metrics that help show when 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.
KR currently has a forward P/E ratio of 12.35, while WMMVY has a forward P/E of 24.15. We also note that KR has a PEG ratio of 1.10. 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. WMMVY currently has a PEG ratio of 2.78.
Another notable valuation metric for KR is its P/B ratio of 3.73. 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, WMMVY has a P/B of 7.06.
These metrics, and several others, help KR earn a Value grade of A, while WMMVY has been given a Value grade of C.
KR 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 KR is likely the superior value option right now.