Investors interested in Food - Miscellaneous stocks are likely familiar with Associated British Foods PLC (ASBFY) and Utz Brands (UTZ). 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.
Currently, Associated British Foods PLC has a Zacks Rank of #2 (Buy), while Utz Brands has a Zacks Rank of #3 (Hold). Investors should feel comfortable knowing that ASBFY likely has seen a stronger improvement to its earnings outlook than UTZ has recently. But this is just one factor that value investors are interested in.
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.
The Style Score Value grade factors in a variety of key fundamental metrics, including the popular P/E ratio, P/S ratio, earnings yield, cash flow per share, and a number of other key stats that are commonly used by value investors.
ASBFY currently has a forward P/E ratio of 14.27, while UTZ has a forward P/E of 30.53. We also note that ASBFY has a PEG ratio of 2.17. 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. UTZ currently has a PEG ratio of 2.94.
Another notable valuation metric for ASBFY is its P/B ratio of 1.25. 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, UTZ has a P/B of 1.62.
Based on these metrics and many more, ASBFY holds a Value grade of A, while UTZ has a Value grade of C.
ASBFY 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 ASBFY is likely 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