Yahoo Finance SJM vs. MKC: Which Stock Is the Better Value Option?
Investors looking for stocks in the Food - Miscellaneous sector might want to consider either Smucker (SJM) or McCormick (MKC). 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.
The best way to find great value stocks is to pair a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system. The proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
Currently, Smucker has a Zacks Rank of #2 (Buy), while McCormick has a Zacks Rank of #3 (Hold). This means that SJM's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. But this is just one piece of the puzzle for value investors.
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.
Our Value category grades stocks based on a number of key metrics, including the tried-and-true P/E ratio, the P/S ratio, earnings yield, and cash flow per share, as well as a variety of other fundamentals that value investors frequently use.
SJM currently has a forward P/E ratio of 12.83, while MKC has a forward P/E of 32.84. We also note that SJM has a PEG ratio of 5.94. This figure is similar to the commonly-used P/E ratio, with the PEG ratio also factoring in a company's expected earnings growth rate. MKC currently has a PEG ratio of 6.67.
Another notable valuation metric for SJM is its P/B ratio of 1.52. Investors use the P/B ratio to look at a stock's market value versus its book value, which is defined as total assets minus total liabilities. By comparison, MKC has a P/B of 6.35.
These are just a few of the metrics contributing to SJM's Value grade of A and MKC's Value grade of F.
SJM stands above MKC thanks to its solid earnings outlook, and based on these valuation figures, we also feel that SJM is the superior value option right now.
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The J. M. Smucker Company (SJM) : Free Stock Analysis Report
McCormick Company, Incorporated (MKC) : Free Stock Analysis Report
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