Investors with an interest in Paper and Related Products stocks have likely encountered both Veritiv (VRTV - Free Report) and Glatfelter (GLT - 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 is a proven strategy that targets companies with positive earnings estimate revision trends, while our Style Scores work to grade companies based on specific traits.
Currently, Veritiv has a Zacks Rank of #2 (Buy), while Glatfelter has a Zacks Rank of #3 (Hold). This means that VRTV's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. But this is only part of the picture for value investors.
Value investors also try to analyze a wide range of traditional figures and metrics to help determine whether a company is undervalued at its current share price levels.
The Style Score Value grade factors in a variety of key fundamental metrics, including the popular P/E ratio, P/S ratio, earnings yield, cash flow per share, and a number of other key stats that are commonly used by value investors.
VRTV currently has a forward P/E ratio of 10.27, while GLT has a forward P/E of 18.66. We also note that VRTV has a PEG ratio of 1.71. 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. GLT currently has a PEG ratio of 3.73.
Another notable valuation metric for VRTV is its P/B ratio of 1.17. 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, GLT has a P/B of 1.18.
These metrics, and several others, help VRTV earn a Value grade of B, while GLT has been given a Value grade of C.
VRTV has seen stronger estimate revision activity and sports more attractive valuation metrics than GLT, so it seems like value investors will conclude that VRTV is the superior option right now.