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TGT vs. COST: Which Stock Should Value Investors Buy Now?
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Investors interested in Retail - Discount Stores stocks are likely familiar with Target (TGT - 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 Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.
Target and Costco are sporting Zacks Ranks of #1 (Strong 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 TGT is likely seeing its earnings outlook improve to a greater extent. But this is only part of the picture for value investors.
Value investors are also interested in a number of tried-and-true valuation metrics that help show when 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.
TGT currently has a forward P/E ratio of 19.74, while COST has a forward P/E of 34.10. We also note that TGT has a PEG ratio of 2.62. This figure is similar to the commonly-used P/E ratio, with the PEG ratio also factoring in a company's expected earnings growth rate. COST currently has a PEG ratio of 4.01.
Another notable valuation metric for TGT is its P/B ratio of 5.53. 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, COST has a P/B of 7.99.
These metrics, and several others, help TGT earn a Value grade of B, while COST has been given a Value grade of C.
TGT has seen stronger estimate revision activity and sports more attractive valuation metrics than COST, so it seems like value investors will conclude that TGT is the superior option right now.
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TGT vs. COST: Which Stock Should Value Investors Buy Now?
Investors interested in Retail - Discount Stores stocks are likely familiar with Target (TGT - 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 Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.
Target and Costco are sporting Zacks Ranks of #1 (Strong 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 TGT is likely seeing its earnings outlook improve to a greater extent. But this is only part of the picture for value investors.
Value investors are also interested in a number of tried-and-true valuation metrics that help show when 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.
TGT currently has a forward P/E ratio of 19.74, while COST has a forward P/E of 34.10. We also note that TGT has a PEG ratio of 2.62. This figure is similar to the commonly-used P/E ratio, with the PEG ratio also factoring in a company's expected earnings growth rate. COST currently has a PEG ratio of 4.01.
Another notable valuation metric for TGT is its P/B ratio of 5.53. 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, COST has a P/B of 7.99.
These metrics, and several others, help TGT earn a Value grade of B, while COST has been given a Value grade of C.
TGT has seen stronger estimate revision activity and sports more attractive valuation metrics than COST, so it seems like value investors will conclude that TGT is the superior option right now.