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.
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 favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.
Currently, PCM has a Zacks Rank of #1 (Strong Buy), while SodaStream has a Zacks Rank of #3 (Hold). This means that PCMI's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. However, value investors will care about much more than just this.
Value investors are also interested in a number of tried-and-true valuation metrics that help show when 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.
PCMI currently has a forward P/E ratio of 9.06, while SODA has a forward P/E of 32.17. We also note that PCMI has a PEG ratio of 0.45. 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 4.29.
Another notable valuation metric for PCMI is its P/B ratio of 1.75. Investors use the P/B ratio to look at a stock's market value versus its book value, which is defined as total assets minus total liabilities. By comparison, SODA has a P/B of 5.84.
These are just a few of the metrics contributing to PCMI's Value grade of B and SODA's Value grade of D.
PCMI has seen stronger estimate revision activity and sports more attractive valuation metrics than SODA, so it seems like value investors will conclude that PCMI is the superior option right now.