KR vs. WMT: Which Stock Is the Better Value Option?
Investors interested in stocks from the Retail - Supermarkets sector have probably already heard of Kroger (KR) and Walmart (WMT). But which of these two stocks presents investors with the better value opportunity right now? 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 proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
Kroger has a Zacks Rank of #2 (Buy), while Walmart has a Zacks Rank of #3 (Hold) right now. This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that KR 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 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.
KR currently has a forward P/E ratio of 10.06, while WMT has a forward P/E of 27.27. We also note that KR has a PEG ratio of 1.62. 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. WMT currently has a PEG ratio of 4.96.
Another notable valuation metric for KR is its P/B ratio of 2.62. 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, WMT has a P/B of 4.89.
Based on these metrics and many more, KR holds a Value grade of A, while WMT has a Value grade of C.
KR sticks out from WMT in both our Zacks Rank and Style Scores models, so value investors will likely feel that KR is the better 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
The Kroger Co. (KR) : Free Stock Analysis Report
Walmart Inc. (WMT) : Free Stock Analysis Report
To read this article on Zacks.com click here.
Zacks Investment Research
