NWL vs. PG: Which Stock Should Value Investors Buy Now?

Investors looking for stocks in the Consumer Products - Staples sector might want to consider either Newell Brands (NWL) or Procter & Gamble (PG). 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.

Newell Brands has a Zacks Rank of #2 (Buy), while Procter & Gamble has a Zacks Rank of #4 (Sell) right now. This means that NWL's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. However, value investors will care about much more than just this.

Value investors are also interested in a number of tried-and-true valuation metrics that help show when 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.

NWL currently has a forward P/E ratio of 9.03, while PG has a forward P/E of 21.21. We also note that NWL has a PEG ratio of 6.27. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. PG currently has a PEG ratio of 7.42.

Another notable valuation metric for NWL is its P/B ratio of 0.93. 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, PG has a P/B of 6.43.

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

NWL 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 NWL 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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