ADRNY vs. CHD: Which Stock Is the Better Value Option?

Investors looking for stocks in the Consumer Products - Staples sector might want to consider either Ahold NV (ADRNY) or Church & Dwight (CHD). 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.

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.

Both Ahold NV and Church & Dwight have a Zacks Rank of #2 (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 tend to look at a number of traditional, tried-and-true figures to help them find stocks that they believe are undervalued at their current share price levels.

The Value category of the Style Scores system identifies undervalued companies by looking at a number of key metrics. These include the long-favored P/E ratio, P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that help us determine a company's fair value.

ADRNY currently has a forward P/E ratio of 11.31, while CHD has a forward P/E of 24.96. We also note that ADRNY has a PEG ratio of 1.72. 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. CHD currently has a PEG ratio of 3.35.

Another notable valuation metric for ADRNY is its P/B ratio of 1.87. 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, CHD has a P/B of 5.15.

Based on these metrics and many more, ADRNY holds a Value grade of A, while CHD has a Value grade of D.

Both ADRNY and CHD are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that ADRNY is the superior value option right now.

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

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