GO or RH: Which Is the Better Value Stock Right Now?
Investors interested in stocks from the Consumer Products - Staples sector have probably already heard of Grocery Outlet Holding Corp. (GO) and RH (RH). 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.
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 proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.
Grocery Outlet Holding Corp. and RH are sporting Zacks Ranks of #2 (Buy) and #3 (Hold), respectively, right now. The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that GO has an improving earnings outlook. But this is just one factor that value investors are interested in.
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 highlights undervalued companies by looking at a variety of key metrics, including the popular P/E ratio, as well as the P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that have been used by value investors for years.
GO currently has a forward P/E ratio of 30.69, while RH has a forward P/E of 35. We also note that GO has a PEG ratio of 2.50. 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. RH currently has a PEG ratio of 3.09.
Another notable valuation metric for GO is its P/B ratio of 2.73. 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, RH has a P/B of 9.38.
These metrics, and several others, help GO earn a Value grade of B, while RH has been given a Value grade of C.
GO sticks out from RH in both our Zacks Rank and Style Scores models, so value investors will likely feel that GO is the better option right now.
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Grocery Outlet Holding Corp. (GO) : Free Stock Analysis Report
RH (RH) : Free Stock Analysis Report
