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CMPGY vs. CMG: Which Stock Is the Better Value Option?

Zacks Equity Research
·2 min read

Investors looking for stocks in the Retail - Restaurants sector might want to consider either Compass Group PLC (CMPGY) or Chipotle Mexican Grill (CMG). But which of these two stocks presents investors with the better value opportunity right now? Let's take a closer look.

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 Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.

Right now, Compass Group PLC is sporting a Zacks Rank of #2 (Buy), while Chipotle Mexican Grill has a Zacks Rank of #3 (Hold). Investors should feel comfortable knowing that CMPGY likely has seen a stronger improvement to its earnings outlook than CMG has recently. But this is just one factor that value investors are interested in.

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.

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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.

CMPGY currently has a forward P/E ratio of 28.02, while CMG has a forward P/E of 42.25. We also note that CMPGY has a PEG ratio of 0.65. 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. CMG currently has a PEG ratio of 1.82.

Another notable valuation metric for CMPGY is its P/B ratio of 5.59. 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, CMG has a P/B of 17.42.

Based on these metrics and many more, CMPGY holds a Value grade of B, while CMG has a Value grade of D.

CMPGY has seen stronger estimate revision activity and sports more attractive valuation metrics than CMG, so it seems like value investors will conclude that CMPGY is the superior option right now.


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Compass Group PLC (CMPGY) : Free Stock Analysis Report
 
Chipotle Mexican Grill, Inc. (CMG) : Free Stock Analysis Report
 
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Zacks Investment Research