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THS or LW: Which Is the Better Value Stock Right Now?

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Investors interested in Food - Miscellaneous stocks are likely familiar with TreeHouse Foods (THS - Free Report) and Lamb Weston (LW - Free Report) . But which of these two companies is the best option for those looking for undervalued stocks? 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.

TreeHouse Foods has a Zacks Rank of #2 (Buy), while Lamb Weston has a Zacks Rank of #4 (Sell) right now. This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that THS is likely seeing its earnings outlook improve to a greater extent. But this is just one factor that value investors are interested in.

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.

THS currently has a forward P/E ratio of 15.95, while LW has a forward P/E of 30.76. We also note that THS has a PEG ratio of 2.07. 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. LW currently has a PEG ratio of 8.54.

Another notable valuation metric for THS is its P/B ratio of 1.33. 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, LW has a P/B of 38.98.

Based on these metrics and many more, THS holds a Value grade of B, while LW has a Value grade of D.

THS has seen stronger estimate revision activity and sports more attractive valuation metrics than LW, so it seems like value investors will conclude that THS is the superior option right now.


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TreeHouse Foods, Inc. (THS) - free report >>

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