TSCDY or WMT: Which Is the Better Value Stock Right Now?

·2 min read

Investors looking for stocks in the Retail - Supermarkets sector might want to consider either Tesco PLC (TSCDY) or Walmart (WMT). But which of these two stocks presents investors with the better value opportunity right now? Let's 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 Zacks Rank is a proven strategy that targets companies with positive earnings estimate revision trends, while our Style Scores work to grade companies based on specific traits.

Tesco PLC has a Zacks Rank of #2 (Buy), while Walmart has a Zacks Rank of #4 (Sell) right now. Investors should feel comfortable knowing that TSCDY likely has seen a stronger improvement to its earnings outlook than WMT has recently. However, value investors will care about much more than just this.

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.

The Value category of the Style Scores system identifies undervalued companies by looking at a number of key metrics. These include the long-favored P/E ratio, P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that help us determine a company's fair value.

TSCDY currently has a forward P/E ratio of 12.86, while WMT has a forward P/E of 22.49. We also note that TSCDY has a PEG ratio of 2.71. This figure is similar to the commonly-used P/E ratio, with the PEG ratio also factoring in a company's expected earnings growth rate. WMT currently has a PEG ratio of 4.09.

Another notable valuation metric for TSCDY is its P/B ratio of 1.40. Investors use the P/B ratio to look at a stock's market value versus its book value, which is defined as total assets minus total liabilities. By comparison, WMT has a P/B of 4.42.

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

TSCDY sticks out from WMT in both our Zacks Rank and Style Scores models, so value investors will likely feel that TSCDY is the better 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

Tesco PLC (TSCDY) : Free Stock Analysis Report

Walmart Inc. (WMT) : Free Stock Analysis Report

To read this article on Zacks.com click here.

Zacks Investment Research