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BIG vs. ROST: Which Stock Should Value Investors Buy Now?

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Investors looking for stocks in the Retail - Discount Stores sector might want to consider either Big Lots (BIG - Free Report) or Ross Stores (ROST - 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.

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 Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.

Big Lots and Ross Stores are sporting Zacks Ranks of #1 (Strong Buy) and #3 (Hold), respectively, right now. Investors should feel comfortable knowing that BIG likely has seen a stronger improvement to its earnings outlook than ROST has recently. However, value investors will care about much more than just this.

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 highlights undervalued companies by looking at a variety of key metrics, including the popular P/E ratio, as well as the P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that have been used by value investors for years.

BIG currently has a forward P/E ratio of 8.20, while ROST has a forward P/E of 99.85. We also note that BIG has a PEG ratio of 1.24. 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. ROST currently has a PEG ratio of 9.98.

Another notable valuation metric for BIG is its P/B ratio of 1.62. The P/B is a method of comparing a stock's market value to its book value, which is defined as total assets minus total liabilities. By comparison, ROST has a P/B of 12.93.

These are just a few of the metrics contributing to BIG's Value grade of A and ROST's Value grade of D.

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


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