Investors looking for stocks in the Retail - Home Furnishings sector might want to consider either Williams-Sonoma (WSM) or Tempur Sealy (TPX). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.
We have found that the best way to discover great value opportunities is to pair a strong Zacks Rank with a great grade in the Value category of our Style Scores system. The proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.
Williams-Sonoma and Tempur Sealy are both sporting a Zacks Rank of # 2 (Buy) right now. 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. However, value investors will care about much more than just this.
Value investors also try to analyze a wide range of traditional figures and metrics to help determine whether a company is undervalued at its 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.
WSM currently has a forward P/E ratio of 13.71, while TPX has a forward P/E of 21.74. We also note that WSM has a PEG ratio of 1.44. 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. TPX currently has a PEG ratio of 1.45.
Another notable valuation metric for WSM is its P/B ratio of 4.53. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. For comparison, TPX has a P/B of 13.58.
These metrics, and several others, help WSM earn a Value grade of A, while TPX has been given a Value grade of C.
Both WSM and TPX are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that WSM is the superior value option right now.
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Williams-Sonoma, Inc. (WSM) : Free Stock Analysis Report
Tempur Sealy International, Inc. (TPX) : Free Stock Analysis Report
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