SPB vs. K: Which Stock Is the Better Value Option?
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Investors interested in stocks from the Consumer Products - Discretionary sector have probably already heard of Spectrum Brands (SPB) and Kellanova (K). But which of these two companies is the best option for those looking for undervalued stocks? Let's take a closer look.
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 proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
Spectrum Brands has a Zacks Rank of #2 (Buy), while Kellanova 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 SPB 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 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 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.
SPB currently has a forward P/E ratio of 14.58, while K has a forward P/E of 21.78. We also note that SPB has a PEG ratio of 0.25. This popular figure is similar to the widely-used P/E ratio, but the PEG ratio also considers a company's expected EPS growth rate. K currently has a PEG ratio of 2.59.
Another notable valuation metric for SPB is its P/B ratio of 1.22. 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, K has a P/B of 8.05.
Based on these metrics and many more, SPB holds a Value grade of B, while K has a Value grade of C.
SPB sticks out from K in both our Zacks Rank and Style Scores models, so value investors will likely feel that SPB is the better option right now.
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Spectrum Brands Holdings Inc. (SPB) : Free Stock Analysis Report
Kellanova (K) : Free Stock Analysis Report