Investors with an interest in Retail - Miscellaneous stocks have likely encountered both Arhaus, Inc. (ARHS) 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.
The best way to find great value stocks is to pair a strong Zacks Rank with an impressive 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.
Right now, Arhaus, Inc. is sporting a Zacks Rank of #2 (Buy), while Tractor Supply has a Zacks Rank of #3 (Hold). This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that ARHS is likely seeing its earnings outlook improve to a greater extent. But this is just one factor that value investors are interested in.
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.
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.
ARHS currently has a forward P/E ratio of 10.24, while TSCO has a forward P/E of 22.89. We also note that ARHS has a PEG ratio of 0.72. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. TSCO currently has a PEG ratio of 2.23.
Another notable valuation metric for ARHS is its P/B ratio of 7.45. 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, TSCO has a P/B of 12.51.
These are just a few of the metrics contributing to ARHS's Value grade of A and TSCO's Value grade of C.
ARHS stands above TSCO thanks to its solid earnings outlook, and based on these valuation figures, we also feel that ARHS is the superior value option right now.
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