Are Investors Undervaluing Ahold (ADRNY) Right Now?

Here at Zacks, our focus is on the proven Zacks Rank system, which emphasizes earnings estimates and estimate revisions to find great stocks. Nevertheless, we are always paying attention to the latest value, growth, and momentum trends to underscore strong picks.

Of these, perhaps no stock market trend is more popular than value investing, which is a strategy that has proven to be successful in all sorts of market environments. Value investors use tried-and-true metrics and fundamental analysis to find companies that they believe are undervalued at their current share price levels.

On top of the Zacks Rank, investors can also look at our innovative Style Scores system to find stocks with specific traits. For example, value investors will want to focus on the "Value" category. Stocks with high Zacks Ranks and "A" grades for Value will be some of the highest-quality value stocks on the market today.

One company to watch right now is Ahold (ADRNY). ADRNY is currently sporting a Zacks Rank #2 (Buy), as well as a Value grade of A. The stock is trading with a P/E ratio of 12.51, which compares to its industry's average of 20.12. ADRNY's Forward P/E has been as high as 14.34 and as low as 11.40, with a median of 12.65, all within the past year.

Investors should also note that ADRNY holds a PEG ratio of 1.57. 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. ADRNY's PEG compares to its industry's average PEG of 2.66. Over the past 52 weeks, ADRNY's PEG has been as high as 2.68 and as low as 1.51, with a median of 1.90.

We should also highlight that ADRNY has a P/B ratio of 2.26. 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. This company's current P/B looks solid when compared to its industry's average P/B of 5.68. Within the past 52 weeks, ADRNY's P/B has been as high as 2.39 and as low as 1.78, with a median of 2.04.

Value investors also frequently use the P/S ratio. This metric is found by dividing a stock's price with the company's revenue. Some people prefer this metric because sales are harder to manipulate on an income statement. This means it could be a truer performance indicator. ADRNY has a P/S ratio of 0.3. This compares to its industry's average P/S of 0.68.

Finally, our model also underscores that ADRNY has a P/CF ratio of 5.79. This metric focuses on a firm's operating cash flow and is often used to find stocks that are undervalued based on the strength of their cash outlook. ADRNY's P/CF compares to its industry's average P/CF of 14.46. Over the past 52 weeks, ADRNY's P/CF has been as high as 6.54 and as low as 5.03, with a median of 5.73.

Another great Consumer Products - Staples stock you could consider is Newell Brands (NWL), which is a Zacks Rank of #2 (Buy) stock with a Value Score of A.

Shares of Newell Brands currently hold a Forward P/E ratio of 8.03, and its PEG ratio is 0.63. In comparison, its industry sports average P/E and PEG ratios of 20.12 and 2.66.

NWL's price-to-earnings ratio has been as high as 15.23 and as low as 5.93, with a median of 8.85, while its PEG ratio has been as high as 1.41 and as low as 0.60, with a median of 0.88, all within the past year.

Newell Brands sports a P/B ratio of 0.86 as well; this compares to its industry's price-to-book ratio of 5.68. In the past 52 weeks, NWL's P/B has been as high as 1.69, as low as 0.70, with a median of 0.98.

These figures are just a handful of the metrics value investors tend to look at, but they help show that Ahold and Newell Brands are likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, ADRNY and NWL feels like a great value stock at the moment.

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

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