Based on key financial metrics such as the price-to-sales ratio, shareholder yield and the price-earnings ratio, the following 3 stocks made the list for top value stocks in the Consumer Goods Conglomerates industry. Those looking for value stocks to add to their portfolio may want to use this list as a starting point for further investment research.

Why Focus on Undervalued Consumer Goods Conglomerates Stocks?

Value investors seek to buy stocks at a discount to their intrinsic value. Long-term returns show that such strategies are advantageous. Value stocks, as a group, tend to outperform growth stocks over extended periods of time. Typically, value investors perform financial analysis of numerous metrics, don’t follow the herd and are long-term investors.

AAII’s A+ Investor Value Grade is derived from a stock’s Value Score. The Value Score is the percentile rank of the average of the percentile ranks of the price-to-sales ratio, price-earnings ratio, enterprise-value-to-EBITDA (EV/EBITDA) ratio, shareholder yield, price-to-book-value ratio and price-to-free-cash-flow ratio. The score is variable, meaning it can consider all six ratios or, should any of the six ratios not be valid, the remaining ratios that are valid. To be assigned a Value Score, stocks must have a valid (non-null) ratio and corresponding ranking for at least two of the six valuation ratios.

What Goes Into AAII’s Value Grade?

Stock evaluation requires access to huge amounts of data as well as the knowledge and time to sift through it all, make sense of financial ratios, read income statements and analyze recent stock movement. AAII created A+ Investor, a robust data suite that condenses data research in an actionable and customizable way suitable for investors of all knowledge levels, to help investors with that task.

AAII’s proprietary stock grades come with A+ Investor. These offer intuitive A–F grades for more than just value. It is possible for a stock to appear cheap based on one valuation metric but appear expensive on another. It is also possible for one valuation ratio to be associated with outperforming stocks during certain periods of time but not others. Some stocks may even have null values for certain metrics like the price-earnings ratio or the price-to-book ratio but not others. An example of this would be a company with losses instead of profits or a negative book value because of heavy borrowing. Negative earnings or book value result in non-meaningful ratios that are left blank or null.

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3 Undervalued Consumer Goods Conglomerates Stocks

Of course, there are countless value stocks that are worth mentioning, but this is a concise list of the top 3 undervalued stocks in the Consumer Goods Conglomerates industry for Monday, October 02, 2023. Let’s take a closer look at their individual scores to see how they measure up against each other and the Consumer Goods Conglomerates industry median.

The Value Grade is assigned based on how each stock’s composite valuation compares to all other stocks.

The process for assigning grades starts with each variable for a given stock. The percentile rankings for all valid ratios that a stock has are calculated. So, for instance, a stock could have a price-to-book ranking in the 43rd percentile, a price-earnings ranking in the 67th percentile, a price-to-sales ranking in the 23rd percentile, etc. Then, those rankings are averaged for each stock. (A minimum of two valid variables are required, though all six will be used if available.)

Once the average of the individual variables is calculated, that average is ranked against all stocks. Put another way, each stock’s composite valuation is compared to all other stocks. These ranks are then sorted into quintiles from the cheapest 20% (a grade of A) to the most expensive 20% (a grade of F).

As always, we recommend that you conduct proper due diligence and research before investing in any security. We also suggest that investors utilize numerous grades, not just value, when it comes to deciding whether a company is a good fit for their allocation needs.

Brookfield Business Corp’s Value Grade

Value Grade:

Brookfield Business Corporation operates as an investment vehicle to own and operate services and operations on a global basis and an alternative vehicle for investors who prefer investing in the Company?s operations through a corporate structure. The Company?s operations consist of interests in Healthscope, CDK Global, Westinghouse, Multiplex and BRK Ambiental. Its services focus on providing end-to-end solutions to customers in both the public and private sector in each of the sectors served. It also provides various services including cloud-based, software as a service (SaaS) solution to dealerships and original equipment manufacturers (OEMs) across automotive and related industries in the United States; nuclear technology services to the global nuclear power generation industry; private sanitation services, including collection, treatment and distribution of water and wastewater to a range of residential and governmental customers in Brazil, and global construction services.

Stocks with a Value Score from 81 to 100 are considered deep value, those with a score between 61 and 80 are value and so on.

Brookfield Business Corp has a Value Score of 82, which is considered to be undervalued.

When you look at Brookfield Business Corp’s price-to-sales ratio at 0.08 compared to the industry median at 1.21, this company has a lower price relative to revenue compared to its peers. This could make Brookfield Business Corp’s stock more attractive for value investors.

Brookfield Business Corp’s price-earnings ratio is 3.85 compared to the industry median at 15.65. This means it has a lower share price relative to earnings compared to its peers. This could make Brookfield Business Corp more attractive for value investors.

Now, let’s assess Brookfield Business Corp’s EV/EBITDA ratio, also known as enterprise multiple. At 8.1, when compared to the industry median of 9.1, the company may be considered undervalued in relation to its peers. Value investors could use the enterprise multiple to identify stocks that are considered overvalued or undervalued relative to their industry.

Shareholder yield is the sum of a stock’s dividend yield (paid over previous 12 months minus special dividends) and the percentage of net share buybacks over the previous 12 months. Brookfield Business Corp’s shareholder yield is lower than its industry median ratio of 3.42%. Value investors may look for an attractive shareholder yield because it can be a powerful tool for identifying if the company has a good management team.

As one of the most common value metrics, the price-to-book ratio evaluates a company’s current market price relative to its book value. Brookfield Business Corp’s price-to-book ratio is higher than its industry median ratio of 2.68. This could make Brookfield Business Corp less attractive to investors looking for a new addition to their portfolio.

Hitachi Ltd (ADR)’s Value Grade

Value Grade:

Hitachi Ltd is a Japan-based company mainly engaged in the development, manufacturing and sales of products and provision of services. The Company has five business segments. Digital Systems & Services segment provides services such as system integration, consulting and cloud services, information technology (IT) products and software and automated teller machines (ATMs). Green Energy & Mobility segment provides power grids, renewable energy, nuclear power and rail systems. Connective Industries segment provides elevators, home appliances and air conditioning, industrial measurement and analysis systems, industrial and distribution solutions, water and environmental solutions, and industrial equipment. Automotive Systems segment offers powertrain, chassis, advanced driver assistance and systems for two-wheelers. The Others segment is engaged in the provision of optical disc drives and management, sale and rental of real estate.

Stocks with a Value Score from 81 to 100 are considered deep value, those with a score between 61 and 80 are value and so on.

Hitachi Ltd (ADR) has a Value Score of 65, which is considered to be undervalued.

Hitachi Ltd (ADR)’s price-earnings ratio is 12.8 compared to the industry median at 15.6. This means that it has a lower price relative to its earnings compared to its peers. This makes Hitachi Ltd (ADR) more attractive for value investors.

Hitachi Ltd (ADR)’s price-to-book ratio is higher than its peers. This could make Hitachi Ltd (ADR) less attractive for value investors when compared to the industry median at 2.68.

You can read more about Hitachi Ltd (ADR)’s key financial metrics like shareholder yield, price-to-free-cash-flow and EV/EBITDA ratio, or learn more about its Momentum and Growth Grades, by subscribing to A+ Investor.

Kawasaki Heavy Industries Ltd (ADR)’s Value Grade

Value Grade:

Kawasaki Heavy Industries, Ltd. is general engineering manufacturer. The Company operates in seven business segments. The Aerospace System segment is engaged in the manufacture and sale of aircraft and jet engines. The Energy Environment Plant segment manufactures and sells industrial gas turbines, prime movers, industrial machinery, boilers, environmental equipment, steel structures and crushers. The Precision Machinery and Robot manufactures and sells hydraulic equipment and industrial robots. The Ship and Marine manufactures and sells ships. The Vehicle segment manufactures and sells rail vehicles. The Motorcycle & Engine segment manufactures and sells motorcycles, four-wheeled buggy vehicles, multi-purpose four-wheeled vehicles, personal watercrafts, and general-purpose gasoline engines. The Others segment includes commerce, mediation and placement of sales and orders, as well as management of well-being facilities.

Stocks with a Value Score from 81 to 100 are considered deep value, those with a score between 61 and 80 are value and so on.

Kawasaki Heavy Industries Ltd (ADR) has a Value Score of 81, which is considered to be undervalued.

Kawasaki Heavy Industries Ltd (ADR)’s price-earnings ratio is 10.8 compared to the industry median at 15.6. This means that it has a lower price relative to its earnings compared to its peers. This makes Kawasaki Heavy Industries Ltd (ADR) more attractive for value investors.

Kawasaki Heavy Industries Ltd (ADR)’s price-to-book ratio is higher than its peers. This could make Kawasaki Heavy Industries Ltd (ADR) less attractive for value investors when compared to the industry median at 2.68.

You can read more about Kawasaki Heavy Industries Ltd (ADR)’s key financial metrics like shareholder yield, price-to-free-cash-flow and EV/EBITDA ratio, or learn more about its Momentum and Growth Grades, by subscribing to A+ Investor.

Other Consumer Goods Conglomerates Stock Grades

Value is just one of the five Stock Grades included in our A+ Investor service. AAII members can see the top-graded stocks—those with grades of A or B for value, growth, momentum, earnings estimate revisions and quality—on the A+ Stock Grades Screener.

Also, if you want full access to all of AAII’s premium services, you can subscribe to one convenient bundled plan called AAII Platinum where you can try out A+ Investor, AAII Dividend Investing, the Stock Superstars Report, Growth Investing and VMQ Stocks. With the other premium services, you can dive deep into additional metrics, portfolios, commentary and information about Consumer Goods Conglomerates stocks as well as other industrys.

Choosing Which of the 3 Best Consumer Goods Conglomerates Stocks Is Right for You

Choosing which value stocks to invest in will ultimately depend on your individual goals and allocation; however, comparing similar value stocks in the same industry can help you analyze which might be better investments for you in the long run. So, let’s take a look at the Value Grade for all of our stocks.

• Brookfield Business Corp stock has a Value Grade of A.
• Hitachi Ltd (ADR) stock has a Value Grade of B.
• Kawasaki Heavy Industries Ltd (ADR) stock has a Value Grade of A.

Now that you have a bit more background about each of the 3 undervalued stocks in the Consumer Goods Conglomerates industry as well as their overall grades, it’s time for you to conduct additional research to see if these could fit your portfolio needs based on your goals and risk tolerance. AAII can help you figure out both and identify which investments align with what works best for you.

We do so through a program of education that teaches you to invest for yourself and become an effective manager of your own wealth—no more relying on others for your financial independence. You can rely on AAII for timeless articles on financial planning and stock-picking, unbiased research and actionable analysis that makes you a better investor.

A+ Investor adds to that qualitative teaching by giving you a powerful data suite that helps you whittle down investment decisions to find stocks, exchange-traded funds (ETFs) or mutual funds that meet your needs.

Additional Resources About Consumer Goods Conglomerates Stocks

Want to learn more about Consumer Goods Conglomerates stocks to see if they could be the right investment for you? Check out some additional resources and articles to help you on your financial journey.

• 3 Undervalued Consumer Goods Conglomerates Stocks for Monday, October 02
• 3 Undervalued Consumer Goods Conglomerates Stocks for Friday, September 01
• 3 Undervalued Consumer Goods Conglomerates Stocks for Tuesday, August 08
• What You Need to Know About Brookfield Infrastructure Partners L.P.'s Q2 Earnings

AAII Disclaimer

We make no representations or warranties that any investor will, or is likely to, achieve profits similar to those shown, because past, hypothetical or simulated performance is not necessarily indicative of future results. Before making an investment decision, you should consider your circumstances and whether the information on our content is applicable to your situation. This information was prepared in good faith and we accept no liability for any errors or omissions. The full disclaimer can be read here.