Investors with an interest in Food - Miscellaneous stocks have likely encountered both United Natural Foods (UNFI - Free Report) and Landec (LNDC - Free Report) . But which of these two stocks presents investors with the better value opportunity right now? Let's take a closer look.
The best way to find great value stocks is to pair a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system. The proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.
Both United Natural Foods and Landec 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 only part of the picture 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 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.
UNFI currently has a forward P/E ratio of 5.41, while LNDC has a forward P/E of 45.83. We also note that UNFI has a PEG ratio of 0.60. 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. LNDC currently has a PEG ratio of 4.58.
Another notable valuation metric for UNFI is its P/B ratio of 0.34. 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, LNDC has a P/B of 1.27.
Based on these metrics and many more, UNFI holds a Value grade of A, while LNDC has a Value grade of C.
Both UNFI and LNDC are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that UNFI is the superior value option right now.