Investors looking for stocks in the Food - Miscellaneous sector might want to consider either Nomad Foods (NOMD - Free Report) or Post Holdings (POST - 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 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.
Nomad Foods has a Zacks Rank of #2 (Buy), while Post Holdings has a Zacks Rank of #4 (Sell) right now. Investors should feel comfortable knowing that NOMD likely has seen a stronger improvement to its earnings outlook than POST has recently. But this is only part of the picture for value investors.
Value investors also tend to look at a number of traditional, tried-and-true figures to help them find stocks that they believe are undervalued at their 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.
NOMD currently has a forward P/E ratio of 14.29, while POST has a forward P/E of 21.05. We also note that NOMD has a PEG ratio of 1.59. 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. POST currently has a PEG ratio of 3.01.
Another notable valuation metric for NOMD is its P/B ratio of 1.42. 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, POST has a P/B of 2.61.
Based on these metrics and many more, NOMD holds a Value grade of B, while POST has a Value grade of C.
NOMD has seen stronger estimate revision activity and sports more attractive valuation metrics than POST, so it seems like value investors will conclude that NOMD is the superior option right now.