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ARCO or WEN: Which Is the Better Value Stock Right Now?
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Investors interested in stocks from the Retail - Restaurants sector have probably already heard of Arcos Dorados (ARCO - Free Report) and Wendy's (WEN - Free Report) . But which of these two companies is the best option for those looking for undervalued stocks? Let's take a closer look.
Everyone has their own methods for finding great value opportunities, but our model includes pairing an impressive grade in the Value category of our Style Scores system with a strong Zacks Rank. The proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
Right now, Arcos Dorados is sporting a Zacks Rank of #2 (Buy), while Wendy's has a Zacks Rank of #3 (Hold). This means that ARCO's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. 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.
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.
ARCO currently has a forward P/E ratio of 13.14, while WEN has a forward P/E of 22.80. We also note that ARCO has a PEG ratio of 1.38. 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. WEN currently has a PEG ratio of 2.29.
Another notable valuation metric for ARCO is its P/B ratio of 5.61. 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, WEN has a P/B of 11.36.
These metrics, and several others, help ARCO earn a Value grade of A, while WEN has been given a Value grade of C.
ARCO is currently sporting an improving earnings outlook, which makes it stick out in our Zacks Rank model. And, based on the above valuation metrics, we feel that ARCO is likely the superior value option right now.
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ARCO or WEN: Which Is the Better Value Stock Right Now?
Investors interested in stocks from the Retail - Restaurants sector have probably already heard of Arcos Dorados (ARCO - Free Report) and Wendy's (WEN - Free Report) . But which of these two companies is the best option for those looking for undervalued stocks? Let's take a closer look.
Everyone has their own methods for finding great value opportunities, but our model includes pairing an impressive grade in the Value category of our Style Scores system with a strong Zacks Rank. The proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
Right now, Arcos Dorados is sporting a Zacks Rank of #2 (Buy), while Wendy's has a Zacks Rank of #3 (Hold). This means that ARCO's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. 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.
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.
ARCO currently has a forward P/E ratio of 13.14, while WEN has a forward P/E of 22.80. We also note that ARCO has a PEG ratio of 1.38. 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. WEN currently has a PEG ratio of 2.29.
Another notable valuation metric for ARCO is its P/B ratio of 5.61. 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, WEN has a P/B of 11.36.
These metrics, and several others, help ARCO earn a Value grade of A, while WEN has been given a Value grade of C.
ARCO is currently sporting an improving earnings outlook, which makes it stick out in our Zacks Rank model. And, based on the above valuation metrics, we feel that ARCO is likely the superior value option right now.