Investors with an interest in Retail - Restaurants stocks have likely encountered both Cracker Barrel Old Country Store (CBRL) and Chipotle Mexican Grill (CMG). But which of these two companies is the best option for those looking for undervalued stocks? Let's take a closer look.
Everyone has their own methods for finding great value opportunities, but our model includes pairing an impressive grade in the Value category of our Style Scores system with a strong Zacks Rank. The Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.
Right now, Cracker Barrel Old Country Store is sporting a Zacks Rank of #2 (Buy), while Chipotle Mexican Grill has a Zacks Rank of #3 (Hold). This means that CBRL's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. However, value investors will care about much more than just this.
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 Style Score Value grade factors in a variety of key fundamental metrics, including the popular P/E ratio, P/S ratio, earnings yield, cash flow per share, and a number of other key stats that are commonly used by value investors.
CBRL currently has a forward P/E ratio of 13.68, while CMG has a forward P/E of 40.15. We also note that CBRL has a PEG ratio of 1.45. This figure is similar to the commonly-used P/E ratio, with the PEG ratio also factoring in a company's expected earnings growth rate. CMG currently has a PEG ratio of 1.73.
Another notable valuation metric for CBRL is its P/B ratio of 3.61. 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, CMG has a P/B of 16.60.
These metrics, and several others, help CBRL earn a Value grade of A, while CMG has been given a Value grade of D.
CBRL stands above CMG thanks to its solid earnings outlook, and based on these valuation figures, we also feel that CBRL is the superior value option right now.
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Cracker Barrel Old Country Store, Inc. (CBRL) : Free Stock Analysis Report
Chipotle Mexican Grill, Inc. (CMG) : Free Stock Analysis Report
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