Back to top

Image: Bigstock

Is Danone (DANOY) Stock Undervalued Right Now?

Read MoreHide Full Article

Here at Zacks, we focus on our proven ranking system, which places an emphasis on earnings estimates and estimate revisions, to find winning stocks. But we also understand that investors develop their own strategies, so we are constantly looking at the latest trends in value, growth, and momentum to find strong companies for our readers.

Of these, perhaps no stock market trend is more popular than value investing, which is a strategy that has proven to be successful in all sorts of market environments. Value investors use a variety of methods, including tried-and-true valuation metrics, to find these stocks.

Luckily, Zacks has developed its own Style Scores system in an effort to find stocks with specific traits. Value investors will be interested in the system's "Value" category. Stocks with both "A" grades in the Value category and high Zacks Ranks are among the strongest value stocks on the market right now.

One company to watch right now is Danone (DANOY - Free Report) . DANOY is currently sporting a Zacks Rank of #2 (Buy), as well as an A grade for Value. The stock has a Forward P/E ratio of 15.64. This compares to its industry's average Forward P/E of 17.95. DANOY's Forward P/E has been as high as 17.40 and as low as 12.71, with a median of 14.91, all within the past year.

Another valuation metric that we should highlight is DANOY's P/B ratio of 2.27. The P/B ratio is used to compare a stock's market value with its book value, which is defined as total assets minus total liabilities. This stock's P/B looks attractive against its industry's average P/B of 2.39. Within the past 52 weeks, DANOY's P/B has been as high as 2.38 and as low as 1.57, with a median of 1.87.

US Foods (USFD - Free Report) may be another strong Food - Miscellaneous stock to add to your shortlist. USFD is a # 2 (Buy) stock with a Value grade of A.

Shares of US Foods currently holds a Forward P/E ratio of 14.76, and its PEG ratio is 0.66. In comparison, its industry sports average P/E and PEG ratios of 17.95 and 2.08.

USFD's Forward P/E has been as high as 16.35 and as low as 10.17, with a median of 13.21. During the same time period, its PEG ratio has been as high as 0.69, as low as 0.51, with a median of 0.62.

Additionally, US Foods has a P/B ratio of 2.22 while its industry's price-to-book ratio sits at 2.39. For USFD, this valuation metric has been as high as 2.28, as low as 1.51, with a median of 1.96 over the past year.

Value investors will likely look at more than just these metrics, but the above data helps show that Danone and US Foods are likely undervalued currently. And when considering the strength of its earnings outlook, DANOY and USFD sticks out as one of the market's strongest value stocks.


See More Zacks Research for These Tickers


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


Danone (DANOY) - free report >>

US Foods Holding Corp. (USFD) - free report >>

Published in