Investors with an interest in Paper and Related Products stocks have likely encountered both Clearwater Paper (CLW) and Glatfelter (GLT). But which of these two stocks presents investors with the better value opportunity right now? Let's take a closer look.
There are plenty of strategies for discovering value stocks, but we have found that pairing a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system produces the best returns. The proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
Clearwater Paper and Glatfelter are sporting Zacks Ranks of #1 (Strong Buy) and #5 (Strong Sell), respectively, right now. The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that CLW has 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.
CLW currently has a forward P/E ratio of 13.83, while GLT has a forward P/E of 103.61. We also note that CLW has a PEG ratio of 2.77. 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. GLT currently has a PEG ratio of 20.72.
Another notable valuation metric for CLW is its P/B ratio of 0.68. The P/B is a method of comparing a stock's market value to its book value, which is defined as total assets minus total liabilities. By comparison, GLT has a P/B of 0.97.
Based on these metrics and many more, CLW holds a Value grade of A, while GLT has a Value grade of C.
CLW 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 CLW is likely the superior value option right now.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Clearwater Paper Corporation (CLW): Free Stock Analysis Report Glatfelter (GLT): Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research