DKS vs. KAR: Which Stock Should Value Investors Buy Now?
Investors interested in stocks from the Retail - Miscellaneous sector have probably already heard of Dick's Sporting Goods (DKS) and KAR Auction Services (KAR). But which of these two companies is the best option for those looking for undervalued stocks? Let's 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 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.
Dick's Sporting Goods has a Zacks Rank of #2 (Buy), while KAR Auction Services has a Zacks Rank of #4 (Sell) right now. Investors should feel comfortable knowing that DKS likely has seen a stronger improvement to its earnings outlook than KAR has recently. 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 11.06, while KAR has a forward P/E of 19.44. We also note that DKS has a PEG ratio of 1.58. 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. KAR currently has a PEG ratio of 1.65.
Another notable valuation metric for DKS is its P/B ratio of 1.94. The P/B is a method of comparing a stock's market value to its book value, which is defined as total assets minus total liabilities. By comparison, KAR has a P/B of 4.91.
Based on these metrics and many more, DKS holds a Value grade of A, while KAR has a Value grade of C.
DKS has seen stronger estimate revision activity and sports more attractive valuation metrics than KAR, so it seems like value investors will conclude that DKS is the superior option right now.
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DICK'S Sporting Goods, Inc. (DKS) : Free Stock Analysis Report
KAR Auction Services, Inc (KAR) : Free Stock Analysis Report
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