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ARCO or CMG: Which Is the Better Value Stock Right Now?
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Investors with an interest in Retail - Restaurants stocks have likely encountered both Arcos Dorados (ARCO - Free Report) and 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 Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.
Currently, Arcos Dorados has a Zacks Rank of #1 (Strong Buy), while Chipotle Mexican Grill has a Zacks Rank of #2 (Buy). Investors should feel comfortable knowing that ARCO likely has seen a stronger improvement to its earnings outlook than CMG has recently. But this is just one piece of the puzzle for value investors.
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.
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 12.70, while CMG has a forward P/E of 43.45. We also note that ARCO has a PEG ratio of 1. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. CMG currently has a PEG ratio of 1.67.
Another notable valuation metric for ARCO is its P/B ratio of 5.72. Investors use the P/B ratio to look at a stock's market value versus its book value, which is defined as total assets minus total liabilities. By comparison, CMG has a P/B of 21.65.
These metrics, and several others, help ARCO earn a Value grade of A, while CMG has been given a Value grade of C.
ARCO stands above CMG thanks to its solid earnings outlook, and based on these valuation figures, we also feel that ARCO is the superior value option right now.
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ARCO or CMG: Which Is the Better Value Stock Right Now?
Investors with an interest in Retail - Restaurants stocks have likely encountered both Arcos Dorados (ARCO - Free Report) and 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 Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.
Currently, Arcos Dorados has a Zacks Rank of #1 (Strong Buy), while Chipotle Mexican Grill has a Zacks Rank of #2 (Buy). Investors should feel comfortable knowing that ARCO likely has seen a stronger improvement to its earnings outlook than CMG has recently. But this is just one piece of the puzzle for value investors.
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.
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 12.70, while CMG has a forward P/E of 43.45. We also note that ARCO has a PEG ratio of 1. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. CMG currently has a PEG ratio of 1.67.
Another notable valuation metric for ARCO is its P/B ratio of 5.72. Investors use the P/B ratio to look at a stock's market value versus its book value, which is defined as total assets minus total liabilities. By comparison, CMG has a P/B of 21.65.
These metrics, and several others, help ARCO earn a Value grade of A, while CMG has been given a Value grade of C.
ARCO stands above CMG thanks to its solid earnings outlook, and based on these valuation figures, we also feel that ARCO is the superior value option right now.