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ITOCY or FIVE: Which Is the Better Value Stock Right Now?

Zacks Equity Research
·2 min read

Investors interested in Retail - Miscellaneous stocks are likely familiar with Itochu Corp. (ITOCY) and Five Below (FIVE). But which of these two companies is the best option for those looking for undervalued stocks? 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 is a proven strategy that targets companies with positive earnings estimate revision trends, while our Style Scores work to grade companies based on specific traits.

Right now, Itochu Corp. is sporting a Zacks Rank of #2 (Buy), while Five Below 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 ITOCY has an improving earnings outlook. However, value investors will care about much more than just this.

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.

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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.

ITOCY currently has a forward P/E ratio of 6.70, while FIVE has a forward P/E of 39.02. We also note that ITOCY has a PEG ratio of 0.38. 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. FIVE currently has a PEG ratio of 1.20.

Another notable valuation metric for ITOCY is its P/B ratio of 1.17. The P/B ratio is used to compare a stock's market value with its book value, which is defined as total assets minus total liabilities. For comparison, FIVE has a P/B of 10.41.

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

ITOCY stands above FIVE thanks to its solid earnings outlook, and based on these valuation figures, we also feel that ITOCY is the superior value option right now.


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Itochu Corp. (ITOCY) : Free Stock Analysis Report
 
Five Below, Inc. (FIVE) : Free Stock Analysis Report
 
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Zacks Investment Research