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DKS vs. FIVE: Which Stock Should Value Investors Buy Now?

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Investors with an interest in Retail - Miscellaneous stocks have likely encountered both Dick's Sporting Goods (DKS - Free Report) and Five Below (FIVE - 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 emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.

Dick's Sporting Goods and Five Below are sporting Zacks Ranks of #2 (Buy) and #3 (Hold), respectively, right now. This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that DKS is likely seeing its earnings outlook improve to a greater extent. However, value investors will care about much more than just this.

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.

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.

DKS currently has a forward P/E ratio of 12.05, while FIVE has a forward P/E of 44.24. We also note that DKS has a PEG ratio of 1.21. 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. FIVE currently has a PEG ratio of 1.58.

Another notable valuation metric for DKS is its P/B ratio of 2.05. 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, FIVE has a P/B of 12.64.

Based on these metrics and many more, DKS holds a Value grade of B, while FIVE has a Value grade of F.

DKS has seen stronger estimate revision activity and sports more attractive valuation metrics than FIVE, so it seems like value investors will conclude that DKS is the superior option right now.


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DICK'S Sporting Goods, Inc. (DKS) - free report >>

Five Below, Inc. (FIVE) - free report >>