Investors interested in stocks from the Tobacco sector have probably already heard of Imperial Tobacco Group PLC (IMBBY) and Altria (MO). But which of these two stocks presents investors with the better value opportunity right now? Let's take a closer look.
We have found that the best way to discover great value opportunities is to pair a strong Zacks Rank with a great grade in the Value category of our Style Scores system. The proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.
Imperial Tobacco Group PLC has a Zacks Rank of #2 (Buy), while Altria has a Zacks Rank of #3 (Hold) right now. Investors should feel comfortable knowing that IMBBY likely has seen a stronger improvement to its earnings outlook than MO 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.
IMBBY currently has a forward P/E ratio of 8.62, while MO has a forward P/E of 13.46. We also note that IMBBY has a PEG ratio of 1.46. 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. MO currently has a PEG ratio of 1.62.
Another notable valuation metric for IMBBY is its P/B ratio of 3.62. 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, MO has a P/B of 7.19.
These are just a few of the metrics contributing to IMBBY's Value grade of A and MO's Value grade of D.
IMBBY sticks out from MO in both our Zacks Rank and Style Scores models, so value investors will likely feel that IMBBY is the better option right now.
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Imperial Tobacco Group PLC (IMBBY) : Free Stock Analysis Report
Altria Group, Inc. (MO) : Free Stock Analysis Report
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