Investors with an interest in Food - Miscellaneous stocks have likely encountered both Chefs' Warehouse (CHEF - Free Report) and Medifast (MED - 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.
There are plenty of strategies for discovering value stocks, but we have found that pairing a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system produces the best returns. 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, Chefs' Warehouse has a Zacks Rank of #2 (Buy), while Medifast has a Zacks Rank of #3 (Hold). Investors should feel comfortable knowing that CHEF likely has seen a stronger improvement to its earnings outlook than MED has recently. However, value investors will care about much more than just this.
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.
CHEF currently has a forward P/E ratio of 37.73, while MED has a forward P/E of 47.95. We also note that CHEF has a PEG ratio of 1.71. 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. MED currently has a PEG ratio of 2.40.
Another notable valuation metric for CHEF is its P/B ratio of 3.34. 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, MED has a P/B of 18.58.
These metrics, and several others, help CHEF earn a Value grade of B, while MED has been given a Value grade of D.
CHEF sticks out from MED in both our Zacks Rank and Style Scores models, so value investors will likely feel that CHEF is the better option right now.