DKS vs. FIVE: Which Stock Should Value Investors Buy Now?
Investors interested in Retail - Miscellaneous stocks are likely familiar with Dick's Sporting Goods (DKS) and Five Below (FIVE). But which of these two stocks presents investors with the better value opportunity right now? 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 is a proven strategy that targets companies with positive earnings estimate revision trends, while our Style Scores work to grade companies based on specific traits.
Currently, Dick's Sporting Goods has a Zacks Rank of #2 (Buy), while Five Below has a Zacks Rank of #3 (Hold). This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that DKS is likely seeing its earnings outlook improve to a greater extent. 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.
DKS currently has a forward P/E ratio of 10.09, while FIVE has a forward P/E of 35.57. We also note that DKS has a PEG ratio of 1.86. 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. FIVE currently has a PEG ratio of 1.88.
Another notable valuation metric for DKS is its P/B ratio of 4.24. 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, FIVE has a P/B of 8.12.
Based on these metrics and many more, DKS holds a Value grade of A, while FIVE has a Value grade of C.
DKS sticks out from FIVE in both our Zacks Rank and Style Scores models, so value investors will likely feel that DKS is the better option right now.
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DICK'S Sporting Goods, Inc. (DKS) : Free Stock Analysis Report
Five Below, Inc. (FIVE) : Free Stock Analysis Report
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