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ADRNY vs. KMB: Which Stock Should Value Investors Buy Now?

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Investors interested in Consumer Products - Staples stocks are likely familiar with Ahold NV (ADRNY - Free Report) and Kimberly-Clark (KMB - Free Report) . 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.

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 favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.

Ahold NV and Kimberly-Clark are sporting Zacks Ranks of #2 (Buy) and #3 (Hold), respectively, right now. This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that ADRNY is likely seeing its earnings outlook improve to a greater extent. However, value investors will care about much more than just this.

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 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.

ADRNY currently has a forward P/E ratio of 12.34, while KMB has a forward P/E of 17.22. We also note that ADRNY has a PEG ratio of 2.29. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. KMB currently has a PEG ratio of 3.37.

Another notable valuation metric for ADRNY is its P/B ratio of 1.69. 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, KMB has a P/B of 220.68.

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

ADRNY sticks out from KMB in both our Zacks Rank and Style Scores models, so value investors will likely feel that ADRNY is the better option right now.


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