Investors interested in stocks from the Food - Miscellaneous sector have probably already heard of US Foods (USFD) and Lamb Weston (LW). 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 emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.
US Foods and Lamb Weston are sporting Zacks Ranks of #2 (Buy) and #5 (Strong Sell), respectively, right now. Investors should feel comfortable knowing that USFD likely has seen a stronger improvement to its earnings outlook than LW has recently. But this is just one piece of the puzzle for value investors.
Value investors also try to analyze a wide range of traditional figures and metrics to help determine whether a company is undervalued at its 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.
USFD currently has a forward P/E ratio of 18.46, while LW has a forward P/E of 18.99. We also note that USFD has a PEG ratio of 0.89. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. LW currently has a PEG ratio of 1.45.
Another notable valuation metric for USFD is its P/B ratio of 3.73. 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, LW has a P/B of 5.15.
These are just a few of the metrics contributing to USFD's Value grade of A and LW's Value grade of C.
USFD sticks out from LW in both our Zacks Rank and Style Scores models, so value investors will likely feel that USFD is the better option right now.
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US Foods Holding Corp. (USFD) : Free Stock Analysis Report
Lamb Weston (LW) : Free Stock Analysis Report
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