Investors interested in Containers - Paper and Packaging stocks are likely familiar with Graphic Packaging (GPK - Free Report) and AptarGroup (ATR - Free Report) . But which of these two companies is the best option for those looking for undervalued stocks? 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 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.
Right now, Graphic Packaging is sporting a Zacks Rank of #2 (Buy), while AptarGroup has a Zacks Rank of #3 (Hold). Investors should feel comfortable knowing that GPK likely has seen a stronger improvement to its earnings outlook than ATR has recently. But this is only part of the picture for value investors.
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 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.
GPK currently has a forward P/E ratio of 16.66, while ATR has a forward P/E of 28.47. We also note that GPK has a PEG ratio of 1.28. This figure is similar to the commonly-used P/E ratio, with the PEG ratio also factoring in a company's expected earnings growth rate. ATR currently has a PEG ratio of 2.76.
Another notable valuation metric for GPK is its P/B ratio of 2.08. 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, ATR has a P/B of 5.34.
Based on these metrics and many more, GPK holds a Value grade of B, while ATR has a Value grade of D.
GPK has seen stronger estimate revision activity and sports more attractive valuation metrics than ATR, so it seems like value investors will conclude that GPK is the superior option right now.