Investors with an interest in Retail - Miscellaneous stocks have likely encountered both Office Depot (ODP) and Ulta Beauty (ULTA). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.
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.
Right now, both Office Depot and Ulta Beauty are sporting a Zacks Rank of # 2 (Buy). 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 factor that value investors are interested in.
Value investors analyze a variety of traditional, tried-and-true metrics to help find companies 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.
ODP currently has a forward P/E ratio of 3.64, while ULTA has a forward P/E of 24.86. We also note that ODP has a PEG ratio of 0.33. 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. ULTA currently has a PEG ratio of 1.35.
Another notable valuation metric for ODP is its P/B ratio of 0.35. 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, ULTA has a P/B of 9.70.
Based on these metrics and many more, ODP holds a Value grade of A, while ULTA has a Value grade of C.
Both ODP and ULTA are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that ODP is the superior value option right now.
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Office Depot, Inc. (ODP) : Free Stock Analysis Report
Ulta Beauty Inc. (ULTA) : Free Stock Analysis Report
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