You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating indiv idual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
ADRNY or KMB: Which Is the Better Value Stock Right Now?
Investors looking for stocks in the Consumer Products - Staples sector might want to consider either Ahold NV (ADRNY - Free Report) or Kimberly-Clark (KMB - 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 proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.
Ahold NV and Kimberly-Clark are sporting Zacks Ranks of #1 (Strong Buy) and #5 (Strong Sell), respectively, right now. This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that ADRNY is likely seeing its earnings outlook improve to a greater extent. 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.
ADRNY currently has a forward P/E ratio of 11.39, while KMB has a forward P/E of 22.18. We also note that ADRNY has a PEG ratio of 1.57. 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 2.25.
Another notable valuation metric for ADRNY is its P/B ratio of 1.81. 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, KMB has a P/B of 63.28.
These metrics, and several others, help ADRNY earn a Value grade of A, while KMB has been given a Value grade of D.
ADRNY has seen stronger estimate revision activity and sports more attractive valuation metrics than KMB, so it seems like value investors will conclude that ADRNY is the superior option right now.