Investors looking for stocks in the Consumer Products - Staples sector might want to consider either Newell Brands (NWL - Free Report) or PURPLE INNOVATION, INC. (PRPL - 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.
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 proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.
Newell Brands has a Zacks Rank of #2 (Buy), while PURPLE INNOVATION, INC. has a Zacks Rank of #3 (Hold) right now. This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that NWL is likely seeing its earnings outlook improve to a greater extent. But this is just one factor that value investors are interested in.
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.
Our Value category highlights undervalued companies by looking at a variety of key metrics, including the popular P/E ratio, as well as the P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that have been used by value investors for years.
NWL currently has a forward P/E ratio of 11.39, while PRPL has a forward P/E of 180.92. We also note that NWL has a PEG ratio of 1.90. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. PRPL currently has a PEG ratio of 12.06.
Another notable valuation metric for NWL is its P/B ratio of 1.93. 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, PRPL has a P/B of 52.92.
Based on these metrics and many more, NWL holds a Value grade of A, while PRPL has a Value grade of C.
NWL is currently sporting an improving earnings outlook, which makes it stick out in our Zacks Rank model. And, based on the above valuation metrics, we feel that NWL is likely the superior value option right now.