Investors looking for stocks in the Retail - Restaurants sector might want to consider either Bojangles (BOJA) or Texas Roadhouse (TXRH). 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 proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
Bojangles and Texas Roadhouse are sporting Zacks Ranks of #2 (Buy) and #5 (Strong Sell), respectively, right now. 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 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.
BOJA currently has a forward P/E ratio of 22.65, while TXRH has a forward P/E of 27.66. We also note that BOJA has a PEG ratio of 1.81. 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. TXRH currently has a PEG ratio of 2.34.
Another notable valuation metric for BOJA is its P/B ratio of 2.03. Investors use the P/B ratio to look at a stock's market value versus its book value, which is defined as total assets minus total liabilities. By comparison, TXRH has a P/B of 4.60.
These are just a few of the metrics contributing to BOJA's Value grade of B and TXRH's Value grade of F.
BOJA sticks out from TXRH in both our Zacks Rank and Style Scores models, so value investors will likely feel that BOJA is the better option right now.
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Bojangles', Inc. (BOJA) : Free Stock Analysis Report
Texas Roadhouse, Inc. (TXRH) : Free Stock Analysis Report
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