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Investors interested in Food - Miscellaneous stocks are likely familiar with BRF (BRFS) and Kerry Group PLC (KRYAY). But which of these two stocks offers value investors a better bang for their buck right now? We'll need to 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 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.
BRF and Kerry Group PLC are both sporting a Zacks Rank of # 2 (Buy) right now. This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that these stocks have improving earnings outlooks. 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 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.
BRFS currently has a forward P/E ratio of 8.14, while KRYAY has a forward P/E of 19.66. We also note that BRFS has a PEG ratio of 0.20. 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. KRYAY currently has a PEG ratio of 1.73.
Another notable valuation metric for BRFS is its P/B ratio of 1.25. 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, KRYAY has a P/B of 2.48.
These metrics, and several others, help BRFS earn a Value grade of A, while KRYAY has been given a Value grade of C.
Both BRFS and KRYAY are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that BRFS is the superior value option right now.
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BRF S.A. (BRFS) : Free Stock Analysis Report
Kerry Group PLC (KRYAY) : Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).