Investors with an interest in Consumer Products - Staples stocks have likely encountered both Grocery Outlet Holding Corp. (GO) 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.
The best way to find great value stocks is to pair a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system. The proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
Currently, Grocery Outlet Holding Corp. has a Zacks Rank of #2 (Buy), while Colgate-Palmolive has a Zacks Rank of #3 (Hold). This means that GO's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. But this is just one piece of the puzzle for value investors.
Value investors also try to analyze a wide range of traditional figures and metrics to help determine whether a company is undervalued at its 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.
GO currently has a forward P/E ratio of 18.61, while CL has a forward P/E of 25.16. We also note that GO has a PEG ratio of 3.76. 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. CL currently has a PEG ratio of 4.88.
Another notable valuation metric for GO is its P/B ratio of 1.14. 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, CL has a P/B of 101.45.
These are just a few of the metrics contributing to GO's Value grade of B and CL's Value grade of D.
GO has seen stronger estimate revision activity and sports more attractive valuation metrics than CL, so it seems like value investors will conclude that GO is the superior option right now.
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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.
