Which Stock is the Best Value Option?
Investors interested in Retail & Supermarkets stocks are likely to have encountered Walmart (WMT), and Tesco PLC(TSCDY). What stock is better for value investors right now than the other? We will have to take a closer glance.
There are many ways to discover value stocks. But we found that combining a strong Zacks Rank along with a high-quality grade in our Style Scores Value category yields the best returns. Stocks with strong earnings forecast revision trends are favoured by the Zacks Rank, while Style Scores highlight specific characteristics.
Tesco PLC has a Zacks Rank 2 (Buy) and Walmart has a Zacks Rank 3 (Hold). Investors should be happy with the improving analyst outlook as TSCDY has had its earnings estimate revision activity more impressive. Value investors will be more concerned about this.
Value investors will also look at many tried-and-true figures in order to find stocks they believe to be undervalued at current share prices.
Our Value category highlights companies that are undervalued. It looks at a number of key metrics such as the P/E ratio as well as earnings yield, cash flows per share and other fundamentals that value investors have used for years.
TSCDY has a forward PE ratio of 11.03 while WMT currently has a forward PE ratio of 23.39. TSCDY also has a 3.54 PEG ratio. This popular figure is similar in appearance to the well-known P/E ratio. However the PEG rate also considers the company’s expected annual EPS growth rate. WMT currently has an estimated PEG ratio of 4.25.
TSCDY’s P/B ratio of 1.22 is another notable valuation metric. The P/B rate is used to compare a stock’s market value and its book value. Total assets less total liabilities are what the ratio represents. WMT, for comparison, has a P/B ratio of 4.78.
These metrics, along with many others, help TSCDY to earn a value grade of A. While WMT has been awarded a value grade of C.
TSCDY currently has an improving earnings outlook which makes it stand out in our ZacksRank model. We believe that TSCDY is the better value option right now, based upon the valuation metrics.
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Tesco PLC (TSCDY) : Free Stock Analysis Report
Walmart Inc. (WMT) : Free Stock Analysis Report