Investors with an interest in Consumer Products - Staples stocks have likely encountered both Newell Brands (NWL) and WD-40 (WDFC). 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, Newell Brands has a Zacks Rank of #2 (Buy), while WD-40 has a Zacks Rank of #4 (Sell). The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that NWL has an improving earnings outlook. But this is just one piece of the puzzle 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.
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.
NWL currently has a forward P/E ratio of 12.18, while WDFC has a forward P/E of 37.97. We also note that NWL has a PEG ratio of 2.03. 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. WDFC currently has a PEG ratio of 3.80.
Another notable valuation metric for NWL is its P/B ratio of 1.67. 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 17.16.
Based on these metrics and many more, NWL holds a Value grade of A, while WDFC has a Value grade of F.
NWL has seen stronger estimate revision activity and sports more attractive valuation metrics than WDFC, so it seems like value investors will conclude that NWL is the superior option right now.
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Newell Brands Inc. (NWL) : Free Stock Analysis Report
WD-40 Company (WDFC) : Free Stock Analysis Report
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