Investors looking for stocks in the Paper and Related Products sector might want to consider either SMURFIT KAPPA (SMFKY - Free Report) or Neenah Paper (NP - Free Report) . But which of these two stocks offers value investors a better bang for their buck right now? We'll need to take a closer look.
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.
Currently, SMURFIT KAPPA has a Zacks Rank of #2 (Buy), while Neenah Paper has a Zacks Rank of #5 (Strong Sell). This means that SMFKY'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 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 grades stocks based on a number of key metrics, including the tried-and-true P/E ratio, the P/S ratio, earnings yield, and cash flow per share, as well as a variety of other fundamentals that value investors frequently use.
SMFKY currently has a forward P/E ratio of 12.41, while NP has a forward P/E of 20.45. We also note that SMFKY has a PEG ratio of 2.48. 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. NP currently has a PEG ratio of 4.09.
Another notable valuation metric for SMFKY is its P/B ratio of 3.11. 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, NP has a P/B of 3.70.
These are just a few of the metrics contributing to SMFKY's Value grade of B and NP's Value grade of D.
SMFKY stands above NP thanks to its solid earnings outlook, and based on these valuation figures, we also feel that SMFKY is the superior value option right now.