Investors with an interest in Consumer Products - Staples stocks have likely encountered both Newell Brands (NWL - Free Report) and 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.
We have found that the best way to discover great value opportunities is to pair a strong Zacks Rank with a great grade in the Value category of our Style Scores system. The proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
Both Newell Brands and PURPLE INNOVATION, INC. 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 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.
NWL currently has a forward P/E ratio of 11.44, while PRPL has a forward P/E of 244.86. We also note that NWL has a PEG ratio of 1.91. 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. PRPL currently has a PEG ratio of 16.32.
Another notable valuation metric for NWL is its P/B ratio of 1.94. Investors use the P/B ratio to look at a stock's market value versus its book value, which is defined as total assets minus total liabilities. By comparison, PRPL has a P/B of 57.85.
These are just a few of the metrics contributing to NWL's Value grade of A and PRPL's Value grade of C.
Both NWL and PRPL are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that NWL is the superior value option right now.