Investors with an interest in Food - Miscellaneous stocks have likely encountered both Kraft Heinz (KHC) and TreeHouse Foods (THS). But which of these two stocks presents investors with the better value opportunity right now? Let's take a closer look.
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 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.
Currently, both Kraft Heinz and TreeHouse Foods are holding a Zacks Rank of # 2 (Buy). This means that both companies have witnessed positive earnings estimate revisions, so investors should feel comfortable knowing that both of these stocks have an improving earnings outlook. However, value investors will care about much more than just this.
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.
Our Value category highlights undervalued companies by looking at a variety of key metrics, including the popular P/E ratio, as well as the P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that have been used by value investors for years.
KHC currently has a forward P/E ratio of 13.37, while THS has a forward P/E of 17.02. We also note that KHC has a PEG ratio of 2.23. 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. THS currently has a PEG ratio of 2.61.
Another notable valuation metric for KHC is its P/B ratio of 0.87. 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, THS has a P/B of 1.39.
These metrics, and several others, help KHC earn a Value grade of A, while THS has been given a Value grade of C.
Both KHC and THS are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that KHC is the superior value option right now.
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The Kraft Heinz Company (KHC): Free Stock Analysis Report
TreeHouse Foods, Inc. (THS): Free Stock Analysis Report
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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.