DKS or TSCO: Which Is the Better Value Stock Right Now?
Investors interested in Retail - Miscellaneous stocks are likely familiar with Dick's Sporting Goods (DKS) and Tractor Supply (TSCO). But which of these two stocks offers value investors a better bang for their buck right now? We'll need to take a closer look.
There are plenty of strategies for discovering value stocks, but we have found that pairing a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system produces the best returns. The proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
Both Dick's Sporting Goods and Tractor Supply have a Zacks Rank of # 2 (Buy) right now. The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that both of these companies have improving earnings outlooks. But this is just one piece of the puzzle for value investors.
Value investors also tend to look at a number of traditional, tried-and-true figures to help them find stocks 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.
DKS currently has a forward P/E ratio of 7.59, while TSCO has a forward P/E of 21.64. We also note that DKS has a PEG ratio of 1.52. 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. TSCO currently has a PEG ratio of 2.21.
Another notable valuation metric for DKS is its P/B ratio of 3.95. 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, TSCO has a P/B of 12.86.
Based on these metrics and many more, DKS holds a Value grade of A, while TSCO has a Value grade of C.
Both DKS and TSCO are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that DKS is the superior value option right now.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
DICK'S Sporting Goods, Inc. (DKS) : Free Stock Analysis Report
Tractor Supply Company (TSCO) : Free Stock Analysis Report
To read this article on Zacks.com click here.
