Investors looking for stocks in the Tobacco sector might want to consider either Imperial Tobacco Group PLC (IMBBY - Free Report) or Altria (MO - 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.
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 proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.
Currently, Imperial Tobacco Group PLC has a Zacks Rank of #2 (Buy), while Altria has a Zacks Rank of #3 (Hold). Investors should feel comfortable knowing that IMBBY likely has seen a stronger improvement to its earnings outlook than MO has recently. But this is just one piece of the puzzle for value investors.
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.
IMBBY currently has a forward P/E ratio of 9.04, while MO has a forward P/E of 13.30. We also note that IMBBY has a PEG ratio of 1.53. 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. MO currently has a PEG ratio of 1.67.
Another notable valuation metric for IMBBY is its P/B ratio of 3.80. 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, MO has a P/B of 7.08.
Based on these metrics and many more, IMBBY holds a Value grade of A, while MO has a Value grade of D.
IMBBY has seen stronger estimate revision activity and sports more attractive valuation metrics than MO, so it seems like value investors will conclude that IMBBY is the superior option right now.