Investors interested in Consumer Products - Staples stocks are likely familiar with Newell Brands (NWL - Free Report) and Kimberly-Clark (KMB - Free Report) . But which of these two stocks presents investors with the better value opportunity right now? Let's 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.
Both Newell Brands and Kimberly-Clark have a Zacks Rank of # 2 (Buy) right now. This means that both companies have witnessed positive earnings estimate revisions, so investors should feel comfortable knowing that both of these stocks have an improving earnings outlook. But this is just one piece of the puzzle 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.
Our Value category grades stocks based on a number of key metrics, including the tried-and-true P/E ratio, the P/S ratio, earnings yield, and cash flow per share, as well as a variety of other fundamentals that value investors frequently use.
NWL currently has a forward P/E ratio of 11.99, while KMB has a forward P/E of 19.22. We also note that NWL has a PEG ratio of 2. 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. KMB currently has a PEG ratio of 3.50.
Another notable valuation metric for NWL is its P/B ratio of 2.04. 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, KMB has a P/B of 513.27.
These metrics, and several others, help NWL earn a Value grade of A, while KMB has been given a Value grade of C.
Both NWL and KMB are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that NWL is the superior value option right now.