ADRNY or CL: Which Is the Better Value Stock Right Now?

Investors looking for stocks in the Consumer Products - Staples sector might want to consider either Ahold NV (ADRNY) or Colgate-Palmolive (CL). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.

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 Zacks Rank is a proven strategy that targets companies with positive earnings estimate revision trends, while our Style Scores work to grade companies based on specific traits.

Currently, Ahold NV has a Zacks Rank of #2 (Buy), while Colgate-Palmolive has a Zacks Rank of #3 (Hold). This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that ADRNY is likely seeing its earnings outlook improve to a greater extent. But this is just one factor that value investors are interested in.

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.

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.

ADRNY currently has a forward P/E ratio of 14.96, while CL has a forward P/E of 21.94. We also note that ADRNY has a PEG ratio of 2.67. 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. CL currently has a PEG ratio of 3.93.

Another notable valuation metric for ADRNY is its P/B ratio of 2.65. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. For comparison, CL has a P/B of 188.62.

These are just a few of the metrics contributing to ADRNY's Value grade of A and CL's Value grade of C.

ADRNY has seen stronger estimate revision activity and sports more attractive valuation metrics than CL, so it seems like value investors will conclude that ADRNY is the superior option right now.

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This article originally published on Zacks Investment Research (zacks.com).

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