ADRNY vs. WDFC: Which Stock Should Value Investors Buy Now?
Investors looking for stocks in the Consumer Products - Staples sector might want to consider either Ahold NV (ADRNY) or WD-40 (WDFC). But which of these two stocks offers value investors a better bang for their buck right now? We'll need to 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 WD-40 has a Zacks Rank of #3 (Hold). This means that ADRNY'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 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 13.98, while WDFC has a forward P/E of 37.22. We also note that ADRNY has a PEG ratio of 1.97. 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. WDFC currently has a PEG ratio of 3.72.
Another notable valuation metric for ADRNY is its P/B ratio of 1.94. 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, WDFC has a P/B of 15.44.
Based on these metrics and many more, ADRNY holds a Value grade of A, while WDFC has a Value grade of F.
ADRNY stands above WDFC 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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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.