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ADM vs. AVO: Which Stock Should Value Investors Buy Now?

Investors looking for stocks in the Agriculture - Operations sector might want to consider either Archer Daniels Midland (ADM) or Mission Produce, Inc. (AVO). But which of these two companies is the best option for those looking for undervalued stocks? 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 Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.

Archer Daniels Midland and Mission Produce, Inc. are sporting Zacks Ranks of #2 (Buy) and #5 (Strong Sell), respectively, right now. This means that ADM's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. But this is only part of the picture for value investors.

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.

ADM currently has a forward P/E ratio of 13.46, while AVO has a forward P/E of 23.46. We also note that ADM has a PEG ratio of 1.64. 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. AVO currently has a PEG ratio of 2.60.

Another notable valuation metric for ADM is its P/B ratio of 1.68. 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, AVO has a P/B of 2.62.

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

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


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Archer Daniels Midland Company (ADM) : Free Stock Analysis Report
 
Mission Produce, Inc. (AVO) : Free Stock Analysis Report
 
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