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GEF vs. PKG: Which Stock Is the Better Value Option?

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Investors looking for stocks in the Containers - Paper and Packaging sector might want to consider either Greif (GEF - Free Report) or Packaging Corp. (PKG - Free Report) . But which of these two stocks presents investors with the better value opportunity right now? Let's take a closer look.

We have found that the best way to discover great value opportunities is to pair a strong Zacks Rank with a great grade in the Value category of our Style Scores system. The Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.

Greif has a Zacks Rank of #1 (Strong Buy), while Packaging Corp. has a Zacks Rank of #3 (Hold) right now. The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that GEF has an improving earnings outlook. But this is only part of the picture 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.

Our Value category highlights undervalued companies by looking at a variety of key metrics, including the popular P/E ratio, as well as the P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that have been used by value investors for years.

GEF currently has a forward P/E ratio of 16.98, while PKG has a forward P/E of 19.52. We also note that GEF has a PEG ratio of 1.72. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. PKG currently has a PEG ratio of 2.64.

Another notable valuation metric for GEF is its P/B ratio of 1.52. 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, PKG has a P/B of 4.04.

These metrics, and several others, help GEF earn a Value grade of B, while PKG has been given a Value grade of C.

GEF 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 GEF is likely the superior value option right now.


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