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SPB vs. K: Which Stock Should Value Investors Buy Now?

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Investors interested in Consumer Products - Discretionary stocks are likely familiar with Spectrum Brands (SPB - Free Report) and Kellanova (K - Free Report) . But which of these two companies is the best option for those looking for undervalued stocks? Let's take a closer look.

Everyone has their own methods for finding great value opportunities, but our model includes pairing an impressive grade in the Value category of our Style Scores system with a strong Zacks Rank. The proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.

Right now, both Spectrum Brands and Kellanova are sporting a Zacks Rank of # 2 (Buy). This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that these stocks have improving earnings outlooks. But this is just one piece of the puzzle for value investors.

Value investors analyze a variety of traditional, tried-and-true metrics to help find companies that they believe are undervalued at their 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.

SPB currently has a forward P/E ratio of 19.55, while K has a forward P/E of 21.84. We also note that SPB has a PEG ratio of 0.33. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. K currently has a PEG ratio of 2.59.

Another notable valuation metric for SPB is its P/B ratio of 1.26. Investors use the P/B ratio to look at a stock's market value versus its book value, which is defined as total assets minus total liabilities. By comparison, K has a P/B of 8.07.

These are just a few of the metrics contributing to SPB's Value grade of B and K's Value grade of C.

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


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