Investors interested in Consumer Products - Staples stocks are likely familiar with Ahold NV (ADRNY) and Church & Dwight (CHD). 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 emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.
Currently, Ahold NV has a Zacks Rank of #2 (Buy), while Church & Dwight has a Zacks Rank of #3 (Hold). Investors should feel comfortable knowing that ADRNY likely has seen a stronger improvement to its earnings outlook than CHD has recently. But this is only part of the picture for value investors.
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.
ADRNY currently has a forward P/E ratio of 12.92, while CHD has a forward P/E of 22.65. We also note that ADRNY has a PEG ratio of 1.81. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. CHD currently has a PEG ratio of 3.95.
Another notable valuation metric for ADRNY is its P/B ratio of 2.24. 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, CHD has a P/B of 4.86.
These metrics, and several others, help ADRNY earn a Value grade of A, while CHD has been given a Value grade of D.
ADRNY has seen stronger estimate revision activity and sports more attractive valuation metrics than CHD, so it seems like value investors will conclude that ADRNY is the superior option right now.
#1 Semiconductor Stock to Buy (Not NVDA)
The incredible demand for data is fueling the market's next digital gold rush. As data centers continue to be built and constantly upgraded, the companies that provide the hardware for these behemoths will become the NVIDIAs of tomorrow.
One under-the-radar chipmaker is uniquely positioned to take advantage of the next growth stage of this market. It specializes in semiconductor products that titans like NVIDIA don't build. It's just beginning to enter the spotlight, which is exactly where you want to be.
See This Stock Now for Free >>Ahold NV (ADRNY) : Free Stock Analysis Report
Church & Dwight Co., Inc. (CHD) : Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
