Investors looking for stocks in the Consumer Products - Staples sector might want to consider either Newell Brands (NWL) or WD-40 (WDFC). But which of these two companies is the best option for those looking for undervalued stocks? 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 puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
Both Newell Brands and WD-40 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 analyze a variety of traditional, tried-and-true metrics to help find companies that they believe are undervalued at their 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 10.47, while WDFC has a forward P/E of 38.08. We also note that NWL has a PEG ratio of 2.15. 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. WDFC currently has a PEG ratio of 3.81.
Another notable valuation metric for NWL is its P/B ratio of 1.35. 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. For comparison, WDFC has a P/B of 15.79.
These metrics, and several others, help NWL earn a Value grade of A, while WDFC has been given a Value grade of F.
Both NWL and WDFC are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that NWL is the superior value option right now.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Newell Brands Inc. (NWL) : Free Stock Analysis Report
WD-40 Company (WDFC) : Free Stock Analysis Report
To read this article on Zacks.com click here.