Investors interested in Retail - Miscellaneous stocks are likely familiar with Office Depot (ODP) 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.
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 Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.
Office Depot has a Zacks Rank of #2 (Buy), while Tractor Supply has a Zacks Rank of #3 (Hold) right now. The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that ODP has an improving earnings outlook. However, value investors will care about much more than just this.
Value investors are also interested in a number of tried-and-true valuation metrics that help show when a company is undervalued at its 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 6.83, while TSCO has a forward P/E of 20.10. We also note that ODP has a PEG ratio of 0.62. 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 1.82.
Another notable valuation metric for ODP is its P/B ratio of 0.66. 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, TSCO has a P/B of 7.58.
These are just a few of the metrics contributing to ODP's Value grade of A and TSCO's Value grade of C.
ODP has seen stronger estimate revision activity and sports more attractive valuation metrics than TSCO, so it seems like value investors will conclude that ODP is the superior option right now.
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Office Depot, Inc. (ODP) : Free Stock Analysis Report
Tractor Supply Company (TSCO) : Free Stock Analysis Report
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