Investors interested in Consumer Products - Staples stocks are likely familiar with National Vision (EYE) and Colgate-Palmolive (CL). But which of these two stocks offers value investors a better bang for their buck right now? We'll need to take a closer look.
We have found that the best way to discover great value opportunities is to pair a strong Zacks Rank with a great 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.
Right now, National Vision is sporting a Zacks Rank of #2 (Buy), while Colgate-Palmolive has a Zacks Rank of #3 (Hold). The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that EYE has an improving earnings outlook. But this is just one factor that value investors are interested in.
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 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.
EYE currently has a forward P/E ratio of 17.51, while CL has a forward P/E of 22.74. We also note that EYE has a PEG ratio of 0.90. 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. CL currently has a PEG ratio of 4.10.
Another notable valuation metric for EYE is its P/B ratio of 1.53. The P/B ratio is used to compare a stock's market value with its book value, which is defined as total assets minus total liabilities. For comparison, CL has a P/B of 123.98.
Based on these metrics and many more, EYE holds a Value grade of B, while CL has a Value grade of D.
EYE stands above CL thanks to its solid earnings outlook, and based on these valuation figures, we also feel that EYE is the superior value option right now.
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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).