Investors with an interest in Consumer Products - Staples stocks have likely encountered both Newell Brands (NWL) and Church & Dwight (CHD). 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 proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.
Right now, Newell Brands is sporting a Zacks Rank of #2 (Buy), while Church & Dwight has a Zacks Rank of #3 (Hold). Investors should feel comfortable knowing that NWL likely has seen a stronger improvement to its earnings outlook than CHD has recently. However, value investors will care about much more than just this.
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.
NWL currently has a forward P/E ratio of 7.84, while CHD has a forward P/E of 29.23. We also note that NWL has a PEG ratio of 1.47. 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. CHD currently has a PEG ratio of 3.94.
Another notable valuation metric for NWL is its P/B ratio of 1.07. 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, CHD has a P/B of 5.81.
These are just a few of the metrics contributing to NWL's Value grade of A and CHD's Value grade of D.
NWL stands above CHD thanks to its solid earnings outlook, and based on these valuation figures, we also feel that NWL is the superior value option right now.
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Newell Brands Inc. (NWL): Free Stock Analysis Report
Church & Dwight Co., Inc. (CHD): Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).