Investors looking for stocks in the Retail - Discount Stores sector might want to consider either Big Lots (BIG) or TJX (TJX). But which of these two stocks presents investors with the better value opportunity right now? Let's take a closer look.
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 Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.
Big Lots and TJX are sporting Zacks Ranks of #2 (Buy) and #3 (Hold), respectively, right now. The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that BIG has an improving earnings outlook. But this is only part of the picture for value investors.
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 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.
BIG currently has a forward P/E ratio of 7.04, while TJX has a forward P/E of 23.73. We also note that BIG has a PEG ratio of 0.98. 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. TJX currently has a PEG ratio of 2.23.
Another notable valuation metric for BIG is its P/B ratio of 1.37. 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, TJX has a P/B of 13.56.
These are just a few of the metrics contributing to BIG's Value grade of B and TJX's Value grade of C.
BIG sticks out from TJX in both our Zacks Rank and Style Scores models, so value investors will likely feel that BIG is the better option right now.
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Big Lots, Inc. (BIG) : Free Stock Analysis Report
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