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 offers value investors a better bang for their buck right now? We'll need to take a closer look.
Everyone has their own methods for finding great value opportunities, but our model includes pairing an impressive grade in the Value category of our Style Scores system with a strong Zacks Rank. The Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.
Williams-Sonoma and Tempur Sealy are sporting Zacks Ranks of #2 (Buy) and #3 (Hold), respectively, right now. Investors should feel comfortable knowing that WSM likely has seen a stronger improvement to its earnings outlook than TPX has recently. 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.
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.
WSM currently has a forward P/E ratio of 18.91, while TPX has a forward P/E of 31.31. We also note that WSM has a PEG ratio of 1.89. 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 2.21.
Another notable valuation metric for WSM is its P/B ratio of 5.42. 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, TPX has a P/B of 18.51.
These are just a few of the metrics contributing to WSM's Value grade of B and TPX's Value grade of C.
WSM has seen stronger estimate revision activity and sports more attractive valuation metrics than TPX, so it seems like value investors will conclude that WSM is the superior option right now.
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WilliamsSonoma, Inc. (WSM) : Free Stock Analysis Report
Tempur Sealy International, Inc. (TPX) : Free Stock Analysis Report
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