U.S. markets close in 10 minutes
  • S&P 500

    3,848.28
    +79.81 (+2.12%)
     
  • Dow 30

    31,542.14
    +618.00 (+2.00%)
     
  • Nasdaq

    12,927.70
    +204.23 (+1.61%)
     
  • Russell 2000

    2,179.07
    +32.14 (+1.50%)
     
  • Crude Oil

    66.19
    +2.36 (+3.70%)
     
  • Gold

    1,696.10
    -4.60 (-0.27%)
     
  • Silver

    25.22
    -0.24 (-0.95%)
     
  • EUR/USD

    1.1926
    -0.0053 (-0.44%)
     
  • 10-Yr Bond

    1.5540
    +0.0040 (+0.26%)
     
  • GBP/USD

    1.3852
    -0.0042 (-0.30%)
     
  • USD/JPY

    108.3060
    +0.3300 (+0.31%)
     
  • BTC-USD

    49,181.83
    +900.07 (+1.86%)
     
  • CMC Crypto 200

    981.42
    +38.25 (+4.06%)
     
  • FTSE 100

    6,630.52
    -20.36 (-0.31%)
     
  • Nikkei 225

    28,864.32
    -65.78 (-0.23%)
     

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

  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.
Zacks Equity Research
·2 min read
  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.

Investors interested in stocks from the Retail - Home Furnishings sector have probably already heard of Tempur Sealy (TPX) and Restoration Hardware (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 puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.

Right now, both Tempur Sealy and Restoration Hardware 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 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.

The Style Score Value grade factors in a variety of key fundamental metrics, including the popular P/E ratio, P/S ratio, earnings yield, cash flow per share, and a number of other key stats that are commonly used by value investors.

TPX currently has a forward P/E ratio of 14.98, while RH has a forward P/E of 26.19. We also note that TPX has a PEG ratio of 0.47. This popular figure is similar to the widely-used P/E ratio, but the PEG ratio also considers a company's expected EPS growth rate. RH currently has a PEG ratio of 1.23.

Another notable valuation metric for TPX is its P/B ratio of 11.76. 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 67.48.

These metrics, and several others, help TPX earn a Value grade of B, while RH has been given a Value grade of C.

Both TPX and RH are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that TPX is the superior value 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
 
Tempur Sealy International, Inc. (TPX) : Free Stock Analysis Report
 
RH (RH) : Free Stock Analysis Report
 
To read this article on Zacks.com click here.