Investors looking for stocks in the Containers – Paper and Packaging sector might want to consider either Berry Global (BERY) or AptarGroup (ATR). 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 proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
Currently, Berry Global has a Zacks Rank of #2 (Buy), while AptarGroup has a Zacks Rank of #3 (Hold). This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that BERY 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 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.
BERY currently has a forward P/E ratio of 12.64, while ATR has a forward P/E of 22.89. We also note that BERY has a PEG ratio of 0.76. 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. ATR currently has a PEG ratio of 2.69.
Another notable valuation metric for BERY is its P/B ratio of 4.44. 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, ATR has a P/B of 4.49.
These metrics, and several others, help BERY earn a Value grade of A, while ATR has been given a Value grade of D.
BERY has seen stronger estimate revision activity and sports more attractive valuation metrics than ATR, so it seems like value investors will conclude that BERY is the superior option right now.
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