Investors with an interest in Consumer Products - Staples stocks have likely encountered both National Vision (EYE) and Colgate-Palmolive (CL). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.
Everyone has their own methods for finding great value opportunities, but our model includes pairing an impressive grade in the Value category of our Style Scores system with a strong Zacks Rank. 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.
Right now, National Vision is sporting a Zacks Rank of #2 (Buy), while Colgate-Palmolive has a Zacks Rank of #3 (Hold). Investors should feel comfortable knowing that EYE likely has seen a stronger improvement to its earnings outlook than CL 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.
EYE currently has a forward P/E ratio of 23.78, while CL has a forward P/E of 24.36. We also note that EYE has a PEG ratio of 2.45. 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. CL currently has a PEG ratio of 4.37.
Another notable valuation metric for EYE is its P/B ratio of 1.26. 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, CL has a P/B of 135.62.
These metrics, and several others, help EYE earn a Value grade of B, while CL has been given a Value grade of D.
EYE has seen stronger estimate revision activity and sports more attractive valuation metrics than CL, so it seems like value investors will conclude that EYE is the superior option right now.
7 Best Stocks for the Next 30 Days
Just released: Experts distill 7 elite stocks from the current list of 220 Zacks Rank #1 Strong Buys. They deem these tickers "Most Likely for Early Price Pops."
Since 1988, the full list has beaten the market more than 2X over with an average gain of +24.3% per year. So be sure to give these hand picked 7 your immediate attention.
See them now >>National Vision Holdings, Inc. (EYE) : Free Stock Analysis Report
Colgate-Palmolive Company (CL) : 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.
