Which stock currently offers the better value?

Investors interested in food and meat products stocks are probably familiar with Pilgrim’s Pride (PPC) and Hormel Foods (HRL). But which of these two stocks currently offers value investors the better value for money? We need to take a closer look.

The best way to find stocks that offer good value is to combine a strong Zacks Rank with an impressive 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 evaluate companies based on specific traits.

Pilgrim’s Pride currently has a Zacks Rank of #2 (Buy), while Hormel Foods currently has a Zacks Rank of #3 (Hold). Investors should take comfort in the fact that PPC’s earnings outlook has likely improved more than HRL’s has recently. However, for value investors, this is only part of the picture.

Value investors are also interested in a number of proven valuation metrics that show when a company is undervalued at its current share price level.

Our Value category highlights undervalued companies by looking at a number of key metrics, including the popular P/E ratio, as well as P/S, earnings yield, cash flow per share, and a number of other fundamental metrics that value investors have used for years.

PPC currently has a forward P/E ratio of 12.46, while HRL has a forward P/E ratio of 27.01. We also note that PPC has a PEG ratio of 0.52. This popular number is similar to the widely used P/E ratio, but the PEG ratio also takes into account a company’s expected EPS growth rate. HRL currently has a PEG ratio of 4.43.

Another important valuation metric for PPC is its P/B ratio of 2.31. P/B is a method of comparing a stock’s market value to its book value, which is defined as total assets minus total liabilities. For comparison, HRL has a P/B ratio of 3.87.

Based on these and many other metrics, PPC receives a score of A, while HRL receives a score of C.

PPC is valued above HRL thanks to its solid earnings prospects and based on these valuation numbers, we also believe that PPC is the more worthwhile option at present.

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