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ADRNY vs. KMB: Which Stock Is the Better Value Option?

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Investors interested in stocks from the Consumer Products - Staples sector have probably already heard of Ahold NV (ADRNY - Free Report) and Kimberly-Clark (KMB - 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.

Right now, both Ahold NV and Kimberly-Clark are sporting a Zacks Rank of # 2 (Buy). This means that both companies have witnessed positive earnings estimate revisions, so investors should feel comfortable knowing that both of these stocks have an improving earnings 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 highlights undervalued companies by looking at a variety of key metrics, including the popular P/E ratio, as well as the P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that have been used by value investors for years.

ADRNY currently has a forward P/E ratio of 11.45, while KMB has a forward P/E of 18.38. We also note that ADRNY has a PEG ratio of 2.42. 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. KMB currently has a PEG ratio of 3.46.

Another notable valuation metric for ADRNY is its P/B ratio of 1.86. The P/B ratio is used to compare a stock's market value with its book value, which is defined as total assets minus total liabilities. For comparison, KMB has a P/B of 36.73.

These metrics, and several others, help ADRNY earn a Value grade of A, while KMB has been given a Value grade of C.

Both ADRNY and KMB are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that ADRNY is the superior value option right now.


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