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Investors with an interest in Food - Natural Foods Products stocks have likely encountered both Performance Food Group (PFGC) and Sprouts Farmers (SFM). 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.
Both Performance Food Group and Sprouts Farmers have 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 also tend to look at a number of traditional, tried-and-true figures to help them find stocks that they believe are undervalued at their 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.
PFGC currently has a forward P/E ratio of 18.10, while SFM has a forward P/E of 33.30. We also note that PFGC has a PEG ratio of 0.92. 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. SFM currently has a PEG ratio of 1.85.
Another notable valuation metric for PFGC is its P/B ratio of 3.18. 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, SFM has a P/B of 10.44.
These are just a few of the metrics contributing to PFGC's Value grade of A and SFM's Value grade of C.
Both PFGC and SFM are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that PFGC is the superior value option right now.
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Performance Food Group Company (PFGC) : Free Stock Analysis Report
Sprouts Farmers Market, Inc. (SFM) : Free Stock Analysis Report