PCMI vs. SODA: Which Stock Should Value Investors Buy Now?
Investors looking for stocks in the Consumer Products - Discretionary sector might want to consider either PCM (PCMI) or SodaStream (SODA). 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.
PCM and SodaStream are both sporting a Zacks Rank of # 1 (Strong Buy) right now. Investors should feel comfortable knowing that both of these stocks have an improving earnings outlook since the Zacks Rank favors companies that have witnessed positive analyst estimate revisions. But this is only part of the picture 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.
Our Value category grades stocks based on a number of key metrics, including the tried-and-true P/E ratio, the P/S ratio, earnings yield, and cash flow per share, as well as a variety of other fundamentals that value investors frequently use.
PCMI currently has a forward P/E ratio of 9.09, while SODA has a forward P/E of 32.07. We also note that PCMI has a PEG ratio of 0.45. 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. SODA currently has a PEG ratio of 4.28.
Another notable valuation metric for PCMI is its P/B ratio of 1.71. 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, SODA has a P/B of 5.82.
Based on these metrics and many more, PCMI holds a Value grade of B, while SODA has a Value grade of F.
Both PCMI and SODA are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that PCMI 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.