Investors interested in Food - Meat Products stocks are likely familiar with Pilgrim's Pride (PPC - Free Report) and Hormel Foods (HRL - 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 puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
Right now, Pilgrim's Pride is sporting a Zacks Rank of #2 (Buy), while Hormel Foods has a Zacks Rank of #3 (Hold). This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that PPC is likely seeing its earnings outlook improve to a greater extent. However, value investors will care about much more than just this.
Value investors analyze a variety of traditional, tried-and-true metrics to help find companies that they believe are undervalued at their 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.
PPC currently has a forward P/E ratio of 7.92, while HRL has a forward P/E of 26.89. We also note that PPC has a PEG ratio of 0.55. 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. HRL currently has a PEG ratio of 4.23.
Another notable valuation metric for PPC is its P/B ratio of 1.78. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. For comparison, HRL has a P/B of 4.14.
Based on these metrics and many more, PPC holds a Value grade of B, while HRL has a Value grade of D.
PPC 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 PPC is likely the superior value option right now.