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

Investors looking for stocks in the Food - Miscellaneous sector might want to consider either General Mills (GIS) or Kellogg (K). 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.

The best way to find great value stocks is to pair a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system. 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, General Mills is sporting a Zacks Rank of #2 (Buy), while Kellogg has a Zacks Rank of #3 (Hold). Investors should feel comfortable knowing that GIS likely has seen a stronger improvement to its earnings outlook than K has recently. But this is just one piece of the puzzle for value investors.

Value investors are also interested in a number of tried-and-true valuation metrics that help show when a company is undervalued at its current share price levels.

Our Value category grades stocks based on a number of key metrics, including the tried-and-true P/E ratio, the P/S ratio, earnings yield, and cash flow per share, as well as a variety of other fundamentals that value investors frequently use.

GIS currently has a forward P/E ratio of 16.31, while K has a forward P/E of 16.45. We also note that GIS has a PEG ratio of 2.33. 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. K currently has a PEG ratio of 4.29.

Another notable valuation metric for GIS is its P/B ratio of 4.35. 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 6.46.

Based on these metrics and many more, GIS holds a Value grade of B, while K has a Value grade of C.

GIS stands above K thanks to its solid earnings outlook, and based on these valuation figures, we also feel that GIS is the superior value option right now.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
 
General Mills, Inc. (GIS) : Free Stock Analysis Report
 
Kellogg Company (K) : Free Stock Analysis Report
 
To read this article on Zacks.com click here.