Investors looking for stocks in the Food - Miscellaneous sector might want to consider either Kraft Heinz (KHC) or TreeHouse Foods (THS). But which of these two stocks presents investors with the better value opportunity right now? Let's take a closer look.
There are plenty of strategies for discovering value stocks, but we have found that pairing a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system produces the best returns. The proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
Currently, both Kraft Heinz and TreeHouse Foods are holding a Zacks Rank of # 2 (Buy). This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that these stocks have improving earnings outlooks. However, value investors will care about much more than just this.
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 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.
KHC currently has a forward P/E ratio of 12.93, while THS has a forward P/E of 19.64. We also note that KHC has a PEG ratio of 2.16. 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. THS currently has a PEG ratio of 3.02.
Another notable valuation metric for KHC is its P/B ratio of 0.72. 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, THS has a P/B of 1.59.
These metrics, and several others, help KHC earn a Value grade of B, while THS has been given a Value grade of C.
Both KHC and THS are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that KHC is the superior value option right now.
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The Kraft Heinz Company (KHC) : Free Stock Analysis Report
TreeHouse Foods, Inc. (THS) : Free Stock Analysis Report
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