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ADRNY vs. KMB: Which Stock Is the Better Value Option?

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Investors looking for stocks in the Consumer Products - Staples sector might want to consider either Ahold NV (ADRNY - Free Report) or Kimberly-Clark (KMB). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.

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 Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.

Ahold NV and Kimberly-Clark are sporting Zacks Ranks of #2 (Buy) and #3 (Hold), respectively, right now. Investors should feel comfortable knowing that ADRNY likely has seen a stronger improvement to its earnings outlook than KMB has recently. But this is just one piece of the puzzle 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.

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.

ADRNY currently has a forward P/E ratio of 13.33, while KMB has a forward P/E of 19.46. We also note that ADRNY has a PEG ratio of 2.84. 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. KMB currently has a PEG ratio of 3.80.

Another notable valuation metric for ADRNY is its P/B ratio of 1.81. 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 249.77.

These metrics, and several others, help ADRNY earn a Value grade of A, while KMB has been given a Value grade of C.

ADRNY stands above KMB thanks to its solid earnings outlook, and based on these valuation figures, we also feel that ADRNY is the superior value option right now.


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