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PCMI vs. HEGIY: Which Stock Is the Better Value Option?


Investors interested in stocks from the Consumer Products – Discretionary sector have probably already heard of PCM (PCMI) and Hengan International Group Co., Ltd. Unsponsored ADR (HEGIY). 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 proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.

PCM has a Zacks Rank of #2 (Buy), while Hengan International Group Co., Ltd. Unsponsored ADR has a Zacks Rank of #3 (Hold) right now. The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that PCMI has an improving earnings outlook. But this is only part of the picture 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.

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.

PCMI currently has a forward P/E ratio of 11.62, while HEGIY has a forward P/E of 16.06. We also note that PCMI has a PEG ratio of 0.58. 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. HEGIY currently has a PEG ratio of 1.54.

Another notable valuation metric for PCMI is its P/B ratio of 2.44. The P/B ratio pits a stock’s market value against its book value, which is defined as total assets minus total liabilities. For comparison, HEGIY has a P/B of 3.64.

These metrics, and several others, help PCMI earn a Value grade of B, while HEGIY has been given a Value grade of C.

PCMI has seen stronger estimate revision activity and sports more attractive valuation metrics than HEGIY, so it seems like value investors will conclude that PCMI is the superior option right now.

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