GEF vs. PKG: Which Stock Is the Better Value Option?

Investors interested in Containers - Paper and Packaging stocks are likely familiar with Greif (GEF) and Packaging Corp. (PKG). 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.

Right now, Greif is sporting a Zacks Rank of #1 (Strong Buy), while Packaging Corp. has a Zacks Rank of #2 (Buy). Investors should feel comfortable knowing that GEF likely has seen a stronger improvement to its earnings outlook than PKG has recently. But this is just one piece of the puzzle for value investors.

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.

GEF currently has a forward P/E ratio of 16.87, while PKG has a forward P/E of 22.93. We also note that GEF has a PEG ratio of 1.69. 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. PKG currently has a PEG ratio of 4.59.

Another notable valuation metric for GEF is its P/B ratio of 1.51. 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, PKG has a P/B of 4.21.

These metrics, and several others, help GEF earn a Value grade of B, while PKG has been given a Value grade of C.

GEF has seen stronger estimate revision activity and sports more attractive valuation metrics than PKG, so it seems like value investors will conclude that GEF is the superior option right now.

5 Stocks Set to Double

Each was handpicked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2024. While not all picks can be winners, previous recommendations have soared +143.0%, +175.9%, +498.3% and +673.0%.

Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.

Today, See These 5 Potential Home Runs >>

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

Greif, Inc. (GEF) : Free Stock Analysis Report

Packaging Corporation of America (PKG) : Free Stock Analysis Report

To read this article on Zacks.com click here.

Zacks Investment Research

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

More Related Articles

Info icon

This data feed is not available at this time.

Sign up for the TradeTalks newsletter to receive your weekly dose of trading news, trends and education. Delivered Wednesdays.