Investors looking for stocks in the Consumer Products – Staples sector might want to consider either Albertsons Companies, Inc. (ACI) or Chewy (CHWY). But which of these two companies is the best option for those looking for undervalued stocks? Let's take a closer look.
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 puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
Albertsons Companies, Inc. and Chewy are both sporting 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.
The Value category of the Style Scores system identifies undervalued companies by looking at a number of key metrics. These include the long-favored P/E ratio, P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that help us determine a company's fair value.
ACI currently has a forward P/E ratio of 10.19, while CHWY has a forward P/E of 782.47. We also note that ACI has a PEG ratio of 0.85. This popular figure is similar to the widely-used P/E ratio, but the PEG ratio also considers a company's expected EPS growth rate. CHWY currently has a PEG ratio of 39.12.
Another notable valuation metric for ACI is its P/B ratio of 6.36. 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, CHWY has a P/B of 553.32.
These metrics, and several others, help ACI earn a Value grade of A, while CHWY has been given a Value grade of F.
Both ACI and CHWY are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that ACI is the superior value option right now.
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Albertsons Companies, Inc. (ACI) : Free Stock Analysis Report
Chewy Inc. (CHWY) : Free Stock Analysis Report
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