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Investors with an interest in Retail - Miscellaneous stocks have likely encountered both Dick's Sporting Goods (DKS) and Tractor Supply (TSCO). 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 puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
Currently, Dick's Sporting Goods has a Zacks Rank of #2 (Buy), while Tractor Supply has a Zacks Rank of #3 (Hold). The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that DKS has an improving earnings outlook. But this is only part of the picture for value investors.
Value investors are also interested in a number of tried-and-true valuation metrics that help show when a company is undervalued at its 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.
DKS currently has a forward P/E ratio of 14.41, while TSCO has a forward P/E of 27.03. We also note that DKS has a PEG ratio of 2.28. 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. TSCO currently has a PEG ratio of 3.47.
Another notable valuation metric for DKS is its P/B ratio of 5.58. 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, TSCO has a P/B of 12.92.
Based on these metrics and many more, DKS holds a Value grade of A, while TSCO has a Value grade of C.
DKS sticks out from TSCO in both our Zacks Rank and Style Scores models, so value investors will likely feel that DKS is the better option right now.
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DICK'S Sporting Goods, Inc. (DKS) : Free Stock Analysis Report
Tractor Supply Company (TSCO) : Free Stock Analysis Report