Investors interested in Consumer Products - Discretionary stocks are likely familiar with PCM and SodaStream . But which of these two stocks presents investors with the better value opportunity right now? Let's take a closer look.
Everyone has their own methods for finding great value opportunities, but our model includes pairing an impressive grade in the Value category of our Style Scores system with a strong Zacks Rank. 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.
PCM and SodaStream are sporting Zacks Ranks of #2 (Buy) and #3 (Hold), respectively, right now. The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that PCMI has an improving earnings outlook. 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.
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.
PCMI currently has a forward P/E ratio of 7.89, while SODA has a forward P/E of 32.10. We also note that PCMI has a PEG ratio of 0.39. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. SODA currently has a PEG ratio of 4.28.
Another notable valuation metric for PCMI is its P/B ratio of 1.48. 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. For comparison, SODA has a P/B of 5.83.
Based on these metrics and many more, PCMI holds a Value grade of B, while SODA has a Value grade of D.
PCMI sticks out from SODA in both our Zacks Rank and Style Scores models, so value investors will likely feel that PCMI is the better option right now.