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BURL or COST: Which Is the Better Value Stock Right Now?
Investors with an interest in Retail - Discount Stores stocks have likely encountered both Burlington Stores (BURL - Free Report) and Costco (COST - Free Report) . But which of these two stocks offers value investors a better bang for their buck right now? We'll need to take a closer look.
The best way to find great value stocks is to pair a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system. The proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
Currently, Burlington Stores has a Zacks Rank of #2 (Buy), while Costco 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 BURL has an improving earnings 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.
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.
BURL currently has a forward P/E ratio of 31, while COST has a forward P/E of 54.44. We also note that BURL has a PEG ratio of 1.26. 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. COST currently has a PEG ratio of 5.75.
Another notable valuation metric for BURL is its P/B ratio of 14.58. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. For comparison, COST has a P/B of 18.03.
These are just a few of the metrics contributing to BURL's Value grade of A and COST's Value grade of C.
BURL stands above COST thanks to its solid earnings outlook, and based on these valuation figures, we also feel that BURL is the superior value option right now.