Investors interested in Retail - Supermarkets stocks are likely familiar with Kroger (KR) and WalMart de Mexico SAB de CV (WMMVY). But which of these two stocks presents investors with the better value opportunity right now? Let's take a closer look.
There are plenty of strategies for discovering value stocks, but we have found that pairing a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system produces the best returns. 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.
Kroger has a Zacks Rank of #2 (Buy), while WalMart de Mexico SAB de CV has a Zacks Rank of #3 (Hold) right now. This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that KR is likely seeing its earnings outlook improve to a greater extent. But this is just one piece of the puzzle for value investors.
Value investors are also interested in a number of tried-and-true valuation metrics that help show when a company is undervalued at its 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.
KR currently has a forward P/E ratio of 12, while WMMVY has a forward P/E of 24.84. We also note that KR has a PEG ratio of 1.06. 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. WMMVY currently has a PEG ratio of 2.86.
Another notable valuation metric for KR is its P/B ratio of 3.60. 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, WMMVY has a P/B of 6.55.
These are just a few of the metrics contributing to KR's Value grade of A and WMMVY's Value grade of C.
KR sticks out from WMMVY in both our Zacks Rank and Style Scores models, so value investors will likely feel that KR is the better option right now.
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The Kroger Co. (KR) : Free Stock Analysis Report
WalMart de Mexico SAB de CV (WMMVY) : Free Stock Analysis Report
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