Investors interested in Retail - Restaurants stocks are likely familiar with Bojangles (BOJA) and Starbucks (SBUX). But which of these two companies is the best option for those looking for undervalued stocks? Let's 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 favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.
Right now, Bojangles is sporting a Zacks Rank of #2 (Buy), while Starbucks has a Zacks Rank of #3 (Hold). This means that BOJA's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. But this is just one factor that value investors are interested in.
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.
Our Value category highlights undervalued companies by looking at a variety of key metrics, including the popular P/E ratio, as well as the P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that have been used by value investors for years.
BOJA currently has a forward P/E ratio of 22.79, while SBUX has a forward P/E of 25.22. We also note that BOJA has a PEG ratio of 1.82. 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. SBUX currently has a PEG ratio of 1.87.
Another notable valuation metric for BOJA is its P/B ratio of 2.07. 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, SBUX has a P/B of 70.40.
Based on these metrics and many more, BOJA holds a Value grade of B, while SBUX has a Value grade of C.
BOJA is currently sporting an improving earnings outlook, which makes it stick out in our Zacks Rank model. And, based on the above valuation metrics, we feel that BOJA is likely the superior value option right now.
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Bojangles', Inc. (BOJA) : Free Stock Analysis Report
Starbucks Corporation (SBUX) : Free Stock Analysis Report
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