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HOME vs. TPX: Which Stock Is the Better Value Option?

Zacks Equity Research

Investors with an interest in Retail - Home Furnishings stocks have likely encountered both At Home Group (HOME) and Tempur Sealy (TPX). 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 Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.

At Home Group and Tempur Sealy are both sporting a Zacks Rank of # 2 (Buy) right now. The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that both of these companies have improving earnings outlooks. But this is just one piece of the puzzle for value investors.

Value investors also tend to look at a number of traditional, tried-and-true figures to help them find stocks that they believe are undervalued at their current share price levels.

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The Style Score Value grade factors in a variety of key fundamental metrics, including the popular P/E ratio, P/S ratio, earnings yield, cash flow per share, and a number of other key stats that are commonly used by value investors.

HOME currently has a forward P/E ratio of 10.65, while TPX has a forward P/E of 16.99. We also note that HOME has a PEG ratio of 0.71. This popular figure is similar to the widely-used P/E ratio, but the PEG ratio also considers a company's expected EPS growth rate. TPX currently has a PEG ratio of 0.83.

Another notable valuation metric for HOME is its P/B ratio of 0.51. 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, TPX has a P/B of 14.20.

Based on these metrics and many more, HOME holds a Value grade of A, while TPX has a Value grade of C.

Both HOME and TPX are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that HOME is the superior value option right now.


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Zacks Investment Research