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ARCO vs. CMG: Which Stock Should Value Investors Buy Now?
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Investors looking for stocks in the Retail - Restaurants sector might want to consider either Arcos Dorados (ARCO - Free Report) or Chipotle Mexican Grill (CMG - Free Report) . But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.
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 proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.
Currently, Arcos Dorados has a Zacks Rank of #2 (Buy), while Chipotle Mexican Grill has a Zacks Rank of #3 (Hold). Investors should feel comfortable knowing that ARCO likely has seen a stronger improvement to its earnings outlook than CMG has recently. 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.
ARCO currently has a forward P/E ratio of 14.88, while CMG has a forward P/E of 49.63. We also note that ARCO has a PEG ratio of 0.43. 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. CMG currently has a PEG ratio of 2.13.
Another notable valuation metric for ARCO is its P/B ratio of 7.16. 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, CMG has a P/B of 20.79.
Based on these metrics and many more, ARCO holds a Value grade of A, while CMG has a Value grade of D.
ARCO sticks out from CMG in both our Zacks Rank and Style Scores models, so value investors will likely feel that ARCO is the better option right now.
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ARCO vs. CMG: Which Stock Should Value Investors Buy Now?
Investors looking for stocks in the Retail - Restaurants sector might want to consider either Arcos Dorados (ARCO - Free Report) or Chipotle Mexican Grill (CMG - Free Report) . But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.
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 proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.
Currently, Arcos Dorados has a Zacks Rank of #2 (Buy), while Chipotle Mexican Grill has a Zacks Rank of #3 (Hold). Investors should feel comfortable knowing that ARCO likely has seen a stronger improvement to its earnings outlook than CMG has recently. 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.
ARCO currently has a forward P/E ratio of 14.88, while CMG has a forward P/E of 49.63. We also note that ARCO has a PEG ratio of 0.43. 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. CMG currently has a PEG ratio of 2.13.
Another notable valuation metric for ARCO is its P/B ratio of 7.16. 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, CMG has a P/B of 20.79.
Based on these metrics and many more, ARCO holds a Value grade of A, while CMG has a Value grade of D.
ARCO sticks out from CMG in both our Zacks Rank and Style Scores models, so value investors will likely feel that ARCO is the better option right now.