BJ or CL: Which Is the Better Value Stock Right Now?

Investors interested in Consumer Products - Staples stocks are likely familiar with BJ's Wholesale Club (BJ) and Colgate-Palmolive (CL). But which of these two stocks presents investors with the better value opportunity right now? Let's 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 proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.

BJ's Wholesale Club has a Zacks Rank of #2 (Buy), while Colgate-Palmolive has a Zacks Rank of #3 (Hold) right now. This means that BJ's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. 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.

BJ currently has a forward P/E ratio of 20.78, while CL has a forward P/E of 24.81. We also note that BJ has a PEG ratio of 2.51. 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 4.36.

Another notable valuation metric for BJ is its P/B ratio of 5.85. 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 213.49.

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

BJ is currently sporting an improving earnings outlook, which makes it stick out in our Zacks Rank model. And, based on the above valuation metrics, we feel that BJ is likely the superior value option right now.

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This article originally published on Zacks Investment Research (zacks.com).

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