Investors with an interest in Food - Miscellaneous stocks have likely encountered both United Natural Foods (UNFI - Free Report) and Post Holdings (POST - Free Report) . 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 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.
United Natural Foods and Post Holdings are sporting Zacks Ranks of #2 (Buy) and #3 (Hold), respectively, right now. This means that UNFI's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. 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.
The Style Score Value grade factors in a variety of key fundamental metrics, including the popular P/E ratio, P/S ratio, earnings yield, cash flow per share, and a number of other key stats that are commonly used by value investors.
UNFI currently has a forward P/E ratio of 7.33, while POST has a forward P/E of 18.07. We also note that UNFI has a PEG ratio of 0.81. This popular figure is similar to the widely-used P/E ratio, but the PEG ratio also considers a company's expected EPS growth rate. POST currently has a PEG ratio of 2.58.
Another notable valuation metric for UNFI is its P/B ratio of 0.43. 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 1.76.
These are just a few of the metrics contributing to UNFI's Value grade of A and POST's Value grade of C.
UNFI 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 UNFI is likely the superior value option right now.