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TPX vs. RH: Which Stock Is the Better Value Option?

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Investors with an interest in Retail - Home Furnishings stocks have likely encountered both Tempur Sealy (TPX) and Restoration Hardware (RH). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.

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.

Tempur Sealy and Restoration Hardware are sporting Zacks Ranks of #2 (Buy) and #3 (Hold), respectively, right now. This means that TPX's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. But this is only part of the picture for value investors.

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.

TPX currently has a forward P/E ratio of 13.57, while RH has a forward P/E of 29.11. We also note that TPX has a PEG ratio of 0.63. 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. RH currently has a PEG ratio of 1.96.

Another notable valuation metric for TPX is its P/B ratio of 24.04. 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, RH has a P/B of 27.91.

Based on these metrics and many more, TPX holds a Value grade of A, while RH has a Value grade of C.

TPX is currently sporting an improving earnings outlook, which makes it stick out in our Zacks Rank model. And, based on the above valuation metrics, we feel that TPX is likely the superior value option right now.


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Tempur Sealy International, Inc. (TPX) : Free Stock Analysis Report
 
RH (RH) : Free Stock Analysis Report
 
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