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TGT or TJX: Which Is the Better Value Stock Right Now?

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Investors interested in stocks from the Retail - Discount Stores sector have probably already heard of Target (TGT - Free Report) and TJX (TJX - 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.

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 emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.

Both Target and TJX have a Zacks Rank of # 2 (Buy) right now. This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that these stocks have improving earnings outlooks. But this is only part of the picture for value investors.

Value investors also tend to look at a number of traditional, tried-and-true figures to help them find stocks 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.

TGT currently has a forward P/E ratio of 20.75, while TJX has a forward P/E of 25.19. We also note that TGT has a PEG ratio of 1.56. 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. TJX currently has a PEG ratio of 2.40.

Another notable valuation metric for TGT is its P/B ratio of 8.31. 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, TJX has a P/B of 12.78.

These are just a few of the metrics contributing to TGT's Value grade of B and TJX's Value grade of D.

Both TGT and TJX are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that TGT is the superior value option right now.


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