Investors interested in stocks from the Consumer Products - Staples sector have probably already heard of Ahold NV (ADRNY - Free Report) and WD-40 (WDFC - 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 proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
Currently, Ahold NV has a Zacks Rank of #2 (Buy), while WD-40 has a Zacks Rank of #3 (Hold). This means that ADRNY'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 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 Value category of the Style Scores system identifies undervalued companies by looking at a number of key metrics. These include the long-favored P/E ratio, P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that help us determine a company's fair value.
ADRNY currently has a forward P/E ratio of 14.21, while WDFC has a forward P/E of 37.81. We also note that ADRNY has a PEG ratio of 1.52. 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. WDFC currently has a PEG ratio of 3.78.
Another notable valuation metric for ADRNY is its P/B ratio of 1.77. 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, WDFC has a P/B of 15.18.
Based on these metrics and many more, ADRNY holds a Value grade of A, while WDFC has a Value grade of F.
ADRNY stands above WDFC thanks to its solid earnings outlook, and based on these valuation figures, we also feel that ADRNY is the superior value option right now.