RBGLY vs. CLX: Which Stock Is the Better Value Option?
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Investors looking for stocks in the Soap and Cleaning Materials sector might want to consider either Reckitt Benckiser Group PLC (RBGLY) or Clorox (CLX). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.
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.
Both Reckitt Benckiser Group PLC and Clorox have 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 only part of the picture 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.
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.
RBGLY currently has a forward P/E ratio of 14.73, while CLX has a forward P/E of 24.34. We also note that RBGLY has a PEG ratio of 2.35. 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. CLX currently has a PEG ratio of 3.24.
Another notable valuation metric for RBGLY is its P/B ratio of 4.07. The 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. By comparison, CLX has a P/B of 40.67.
These metrics, and several others, help RBGLY earn a Value grade of B, while CLX has been given a Value grade of D.
Both RBGLY and CLX are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that RBGLY is the superior value option right now.
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Reckitt Benckiser Group PLC (RBGLY) : Free Stock Analysis Report
The Clorox Company (CLX) : Free Stock Analysis Report