Investors interested in stocks from the Soap and Cleaning Materials sector have probably already heard of Unilever PLC (UL - Free Report) and Clorox (CLX - 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 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.
Unilever PLC has a Zacks Rank of #1 (Strong Buy), while Clorox has a Zacks Rank of #3 (Hold) right now. Investors should feel comfortable knowing that UL likely has seen a stronger improvement to its earnings outlook than CLX has recently. But this is just one piece of the puzzle 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.
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.
UL currently has a forward P/E ratio of 21.01, while CLX has a forward P/E of 23.36. We also note that UL has a PEG ratio of 3.27. This popular figure is similar to the widely-used P/E ratio, but the PEG ratio also considers a company's expected EPS growth rate. CLX currently has a PEG ratio of 4.28.
Another notable valuation metric for UL is its P/B ratio of 4.84. 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, CLX has a P/B of 23.97.
Based on these metrics and many more, UL holds a Value grade of A, while CLX has a Value grade of D.
UL stands above CLX thanks to its solid earnings outlook, and based on these valuation figures, we also feel that UL is the superior value option right now.